Is Wal-Mart a Monopsony? Evidence from Local Labor Markets
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This paper measures the degree of monopsony power exerted by Wal-Mart over retail
workers using a dominant-firm model and data in the 48 contiguous U.S. states for counties
where the company operates, presenting for the first time a measure of the company’s anticompetitive
behavior. Empirical results show that Wal-Mart’s monopsony power over
workers varies significantly across the country, being higher in non-metro and rural counties,
particularly in the south. For instance, Wal-Mart’s buying power index in labor markets in
rural southern and central states is estimated to be 5% or higher while the impact on
northeastern states’ retail wages is negligible.