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Monopsony and two‐part tariffs

Roger D. Blair and Christina DePasquale

Managerial and Decision Economics, 2020, vol. 41, issue 5, 730-734

Abstract: We adapt the traditional model of two‐part tariffs by a monopolist to the case of monopsony. We show that the resulting offer is that the seller pays its producer surplus as an access fee in exchange for the buyer's promise to buy everything that the seller wants to sell when price equals marginal cost. In addition, we show that this is equivalent to the surplus that the buyer captures with first‐degree price discrimination as well as an all‐or‐nothing offer. We also extend this analysis to the case of uncertainty for a risk‐averse monopsonist.

Date: 2020
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