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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.
|Publisher||Edinburgh School of Economics Discussion Paper Series|
|Publication status||Published - 6 Jan 2019|
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Transparency in Procurement: The design and use of information in trading mechanisms.
1/01/16 → 31/12/18