Personalized Prices and Uncertainty in Monopsony

Roberto Burguet, Jozsef Sakovics

Research output: Working paperDiscussion paper

Abstract / Description of output

We analyze personalized pricing by a monopsonist facing a finite number of ex ante identical, capacity constrained suppliers with privately known costs. When the distribution of costs is sufficiently smooth and regular, the buyer chooses to make the same offer to all suppliers, leading to a posted price. This price is lower than the classical monopsony price if the demand function is concave, and higher if the demand is convex. In the limit as the seller capacities tend to zero we obtain the classical monopsony price. Therefore, our model provides a decentralized micro-foundation for monopsony.
Original languageEnglish
PublisherEdinburgh School of Economics Discussion Paper Series
Pages28
Publication statusPublished - 6 Jan 2019

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