Labor Monopsony and the Limits of the Law

Suresh Naidu, Columbia University and Eric A. Posner, University of Chicago - Law School discuss Labor Monopsony and the Limits of the Law.

ABSTRACT: Recent literature has suggested that antitrust regulation is an appropriate response to labor market monopsony. This article qualifies the primacy of antitrust by arguing that a significant degree of labor market power is “frictional,” that is, without artificial barriers to entry or excessive concentration of employment. If monopsony is pervasive under conditions of laissez-faire, antitrust is likely to play only a partial role in remedying it, and other legal and policy instruments to intervene in the labor market will be required.