Personalized prices and uncertainty in monopsony

Roberto Burguet and József Sákovics

International Journal of Industrial Organization, 2019, vol. 67, issue C

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.

Keywords: Monopsony; Aggregate uncertainty; Price discrimination (search for similar items in EconPapers)
JEL-codes: D42 L12 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Personalized prices and uncertainty in monopsony (2019)
Working Paper: Personalized Prices and Uncertainty in Monopsony (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:67:y:2019:i:c:s0167718719300529

DOI: 10.1016/j.ijindorg.2019.102530

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