Personalized prices and uncertainty in monopsony

Roberto Burguet, Jozsef Sakovics

Research output: Contribution to journalArticlepeer-review

Abstract

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. When demand is sufficiently concave (convex) this price is lower (higher) than the classical monopsony price. 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
Article number102530
Pages (from-to)1-12
JournalInternational Journal of Industrial Organization
Volume67
Early online date29 Aug 2019
DOIs
Publication statusPublished - Dec 2019

Keywords

  • monopsony
  • aggregate uncertainty
  • price discrimination

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