Is Wal-Mart a Monopsony?

Only available on StudyMode
  • Download(s): 39
  • Published: November 29, 2006
Read full document
Text Preview
Is the world's largest retailer, Wal-Mart, a Monopsyny?
•Monopsony arises when a firm captures the ability to dictate price to its suppliers, because the suppliers have no real choice other than to deal with that buyer. •One in every five retail sales in America is recorded at Wal-Mart's cash registers. •The firm's revenue nearly equals that of the next six retailers combined. •Wal-Mart has faced several accusations of, "predatory pricing", or intentionally selling a product below cost in order to drive some or all competitors out of the market. •Wal-Mart accounts for upward of 30 percent of U.S. sales, and plans to more than double its sales within the next five years. •Wal-Mart decided that it did not approve of the artificial sweetener Coca-Cola planned to use in a new line of diet colas. In a response that would have been unthinkable just a few years ago, Coca-Cola yielded to the will of an outside firm and designed a second product to meet Wal-Mart's decree. •Wal-Mart recently decided to allow each individual pharmacist in the company to choose whether or not to stock the "morning after" pill. •Wal-Mart's constant demand for lower prices caused Kraft Foods to "shut down thirty-nine plants, to let go of 13,500 workers, and to eliminate a quarter of its products." •Wal-Mart's product selection is a controversial subject, and is often right leaning. Examples of items that Wal-Mart does not sell are certain men's magazines such as Maxim and albums marked with RIAA's Parental Advisory Label. •Critics point out apparent hypocrisy in that Wal-Mart sells other controversial items such as rifles and shotguns, R-rated movies, and violent video games. •In 2005, Wal-Mart rejected the original cover of Willie Nelson's reggae album, Countryman, which featured marijuana leaves, in an apparent pro-marijuana statement. To satisfy Wal-Mart, the record label, Lost Highway, issued the album with an alternate cover, without recalling the original cover. •...
tracking img