Monopsony Theory Revisited
The Economic Theory of Costs: Foundations and New Directions, edited by Matthew McCaffrey, Routledge 2017
27 Pages Posted: 9 May 2017 Last revised: 11 Jul 2017
Date Written: May 2, 2017
Standard monopsony theory, old and new, lacks a realistic criterion to distinguish between monopsony and competitive prices. Consequently, prominent Austrian critics have by and large dismissed it. However, the idea that human action occurs in discrete steps, and consequently that the elasticity of the supply schedules of the factors of production, as well as the elasticity of the demand schedules for their products, can be altered as a result of coercion, lead to a theory of "monopoly price-gap", with monopoly and monopsony prices as two features of the same phenomenon.
Keywords: monopsony, monopoly
JEL Classification: B21, B25, B13, B53, D33, D41, D42, D43, D61, J23, J21, J31, J42, L12, L13
Suggested Citation: Suggested Citation