Wal-Mart's monopsony power in metro and non-metro labor markets

Abstract

This paper measures the potential degree of monopsony power that Wal-Mart can exert over retail workers using a dominant-firm model and nationwide, county-level data, presenting for the first time a measure of the company's potential anti-competitive behavior and detailed spatial impacts on wages, particularly for metropolitan and non-metropolitan counties. Empirical results show that, at the national level, Wal-Mart's potential wage markdown below the competitive level amounts to less than 3% on average. However, the potential markdowns in non-metropolitan counties are three-fold those in metropolitan counties and are highest in non-metro areas of the south and central states but negligible in northeastern states.