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

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.

► We measure the potential monopsony power of Wal-Mart over retail workers. ► We assess its level of buying power over retail workers across the contiguous U.S. ► Wal-Mart's impact on per-capita retail earning is higher in non-metro areas. ► Larger degrees of Wal-Mart's monopsony power are found in the rural South.