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Monopsony 2013: Still Not Truly Symmetric

Jonathan M. Jacobson, The Antitrust Source, December 2013.

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We have been assured for years that “monopoly and monopsony are symmetrical distortions of
competition,” and that statement is precisely true. But the conclusion some commentators have
told us to draw, that symmetric legal and economic treatment is necessarily required, is sometimes
quite wrong. Despite the superficial appeal of symmetric outcomes, economic analysis frequently
yields a different result. And, indeed, the case law over many decades has been consistent
in authorizing conduct by buyers that symmetric treatment would prevent. To that end, the
courts routinely uphold practices like purchasing cooperatives whose counterparts are invariably
condemned as unlawful per se on the selling side. And to this day, no reported case has found
a firm guilty of unilateral monopsonization, notwithstanding the numerous occasions in which single-
firm conduct has been held to constitute unlawful monopolization under Section 2 of the
Sherman Act.
The purposes of this article are, first, to explain the important real-world economic differences
between monopoly and monopsony and, second, to analyze why the outcomes in the relevant
case law are generally consistent with sound economic analysis. As I explain, the economic reasons
why symmetric outcomes are often unwarranted are complex and the courts have never
specifically discussed them. Instead, the courts—while maintaining their ability to distinguish
purely naked restraints from conduct that may in fact benefit consumers—appear guided by the
simple intuition that buyer power tends to reduce prices, and that lower prices are good. That intuition
does not always hold true. But it is correct often enough, and it has led to case law results
that, in the main, promote antitrust’s goal of preserving competition for the benefit of consumers.

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