Factor market monopsony and international duopoly

Naoto Jinji

The Journal of International Trade & Economic Development, 2012, vol. 21, issue 2, 271-286

Abstract: In this article, I investigate the effects of monopsony power in the factor market when the output market is internationally duopolistic. Two firms (North and South) compete in the Northern market. The Southern firm has monopsony power in the labor market, while the Northern firm does not. I show that the Northern firm actually benefits from the Southern firm's exercise of monopsony power in the labor market. Northern consumers, however, suffer from it. Imposing labor standards results in conferral of a strategic advantage on the Southern firm, whereas it may improve Northern welfare.

Date: 2012
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DOI: 10.1080/09638191003731278

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