A Generalised Model of Monopsony

17 Pages Posted: 8 May 2006

See all articles by Alan Manning

Alan Manning

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Abstract

This article presents a general but very simple model in which the supply of labour to an individual employer is not infinitely elastic but the employer can also raise employment by increasing expenditure on recruitment. Using this, it is shown how that division between perfect competition and monopsony is whether there are diseconomies of scale in recruitment. Using a unique British data set containing information on both labour turnover costs and the number of recruits we present estimates that do suggest that there is an increasing marginal cost of recruitment.

Suggested Citation

Manning, Alan, A Generalised Model of Monopsony. Economic Journal, Vol. 116, No. 508, pp. 84-100, January 2006. Available at SSRN: https://ssrn.com/abstract=878189 or http://dx.doi.org/10.1111/j.1468-0297.2006.01048.x

Alan Manning (Contact Author)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

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