Antitrust Remedies for Labor Market Power

Citation data:

SSRN Electronic Journal

Publication Year:
2018
Usage 12904
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Downloads 2503
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SSRN
SSRN Id:
3129221; 3141543
DOI:
10.2139/ssrn.3129221
Author(s):
Suresh Naidu; Eric A. Posner; E. Glen Weyl
Publisher(s):
Elsevier BV
Tags:
monopsony; antitrust; merger analysis; matching
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article description
Recent research indicates that labor market power has contributed to wage inequality and economic stagnation. Although the antitrust laws prohibit firms from restricting competition in labor markets like in product markets, the government does little to address the labor market problem and private litigation has been rare and mostly unsuccessful. The reason is that the analytic methods for evaluating labor market power in antitrust contexts are primitive, far less sophisticated than the legal rules used to judge product market power. To remedy this asymmetry, we propose methods for judging the effects of mergers on labor markets. We also extend our approach to other forms of anticompetitive practices undertaken by employers against workers. We highlight some arguments and evidence indicating that market power may be even more important in labor than in product markets.