Personalized Prices and Uncertainty in Monopsony

Roberto Burguet and József Sákovics

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

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. 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.

Pages: 28
Date: 2019-01
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Related works:
Journal Article: 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:edn:esedps:290

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