Tuesday, April 23, 2019
Ioana Elena Marinescu, University of Pennsylvania - School of Social Policy & Practice; National Bureau of Economic Research (NBER) and Eric A. Posner, University of Chicago - Law School ask Why Has Antitrust Law Failed Workers?
ABSTRACT: In the last several years, economists have learned about an antitrust problem of vast scope. Far from approximating the conditions of perfect competition as long assumed, most labor markets are characterized by monopsony — meaning that employers pay workers less than their productivity because workers lack a credible threat to quit and find a higher-paying job in the same market. Yet while antitrust law regulates labor monopsony in the same way as it regulates monopoly on the product market side, antitrust litigation against employers is rare. We document both the magnitude of labor monopsony and the paucity of cases, and argue that this “litigation gap” exists because antitrust case law, which has developed through product-side litigation, is poorly tailored to labor-side problems. We conclude with four proposals for reform of antitrust law so it can better deter labor monopsony.