If you are the only buyer in a market with many suppliers--that is, the single payer--that makes you a monopsonist
, and it gives you a lot of leverage to negotiate for lower prices.
As a result, the increased leverage gave the state a perverse incentive to act as a single buyer, or monopsonist
, which allowed it to negotiate prices down and set terms with far more advantage to itself than would be the case in a competitive market.
To paraphrase the author, the minimum wage eliminates the monopsonist
employer's ability to influence workers' wages.
will choose, in the absence of minimum wages, extremely high capital intensity.
If, on the other hand, the internalization market is not competitive, then internalizers are the monopsonist
equivalent of oligopolists and may have the market power to pay less for order flow than what they make above their costs (plus a market return on capital) from executing orders at a slight improvement over the NBO and NBB.
Although the sole buyer on the domestic market for weapons, the government does not act like a typical monopsonist
because of the way taxes, military budgets, and in many cases procurement contracts are determined ahead of time.
can dictate terms to its suppliers.
A labor monopsonist
, thus, has the ability to pay its workers below the market, thereby generating excess profits.
The Nash bargaining solution that is assumed (cases where the upstream firm acts as a monopolist or the downstream firm as a monopsonist
are particular examples) always leads to efficient outcomes.
The government may still stand before the contractor as a monopsonist
, as the only domestic buyer of heavy weapons, and the veto authority on arms exports.
301) To its suppliers--music companies--China Mobile is therefore a monopsonist
is willing to pay the cost of hiring the worker whenever her productivity is sufficiently high relative to her wage and fires the worker when her productivity falls too low.