Labor Monopsony and Antitrust Enforcement: A Distorting Mirror

Abstract

In recent years, there has been growing interest among economists, lawyers, and policymakers in the concept of monopsony power, particularly in labor markets. This interest has been spurred partially by academic research suggesting that labor-market concentration may be more prevalent than previously thought, as well as policy developments signaling a more aggressive approach by antitrust authorities to labor-monopsony issues. Despite this momentum, however, significant empirical and conceptual challenges remain in the use of antitrust law to address labor monopsony. On the empirical front, the evidence on the extent and impact of labor monopsony is mixed. Conceptually, there are important differences between monopoly and monopsony that complicate the application of traditional antitrust tools and standards to labor markets. This paper urges caution and further study before radically expanding labor-antitrust enforcement.