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Exploitation in Monopsony

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Abstract

A key feature of monopsony is that a single firm pays its workers a wage ( w) less than the marginal revenue product (MRP ). Ever since its creation by Joan Robinson (1933), this feature has been explained as a symbol of the monopsonistic firm exploiting its workers. By using a simple standard efficiency wage model of Yellen (1984), this paper examines the conventional wisdom by showing that the firm pays workers w

Suggested Citation

  • Chung-cheng Lin, 2012. "Exploitation in Monopsony," IEAS Working Paper : academic research 12-A001, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  • Handle: RePEc:sin:wpaper:12-a001
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    References listed on IDEAS

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    More about this item

    Keywords

    Monopsony; exploitation; efficiency wages;

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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