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76 Cornell L. Rev. 297 (1990-1991)
Antitrust Policy and Monopsony

handle is hein.journals/clqv76 and id is 313 raw text is: ANTITRUST POLICY AND MONOPSONY Roger D. Blairt &Jeffirey L. Harrison$ I INTRODUCTION The owners of major league baseball teams have colluded in dealing with free agents,' the NCAA regulates both the number of athletic scholarships and the amount of compensation that athletes receive,2 financial aid officers of the elite colleges and universities meet to avoid a bidding war for the most desirable students,3 tuna canneries in California allegedly fix purchase prices at artificially low levels,4 and antique dealers have rigged bids in public auctions, di- viding the spoils later.5 What do all of these parties have in com- mon? They employ monopsony power: power on the buying side of the market.6 The classical theory of monopsony envisions a market with only one buyer that uses its power to reduce the quantity purchased, t Huber Hurst Professor of Business and Legal Studies, University of Florida. $ Professor of Law, University of Florida. The authors appreciate the financial support of the College of Business Administration and the College of Law at the Univer- sity of Florida. We are also indebted to Herbert Hovenkamp, Robert Lanzillotti, Vir- ginia Maurer, William Page, and Richard Romano for helpful suggestions on an earlier draft. Full responsibilty for what follows, however, is ours. 1 Hal Lancaster, Baseball Owners Conspired to Shut Down Market for Free Agents, Arbitra- tor Rules, Wall St. J., Sept. 22, 1987, at 10, col. 1. The major league baseball players negotiated away their rights to sue under the antitrust laws and, therefore, had to submit grievances based on alleged antitrust violations to arbitration. Some critics who fail to respect the laws of supply and demand prefer collusion. See, e.g., George Vecsey, Bring Back Collusion, N.Y. Times, Dec. 13, 1989, at D23, col. 1'. 2 Gary S. Becker, The NCAA: A Cartel In Sheepskin Clothing, Bus. WK., Sept. 14, 1987, at 24. 3 David Johnston, Price-Fixing Inquiry at 20 Elite Colleges, N.Y. Times, Aug. 10, 1989, at 1, col. 2. The Department ofJustice is also investigating these colleges and universi- ties for the more traditional charge of price fixing on the selling side with regard to tuition. See Connie Leslie & Sue Hutchison, An Ivy League Cartel, NEWSWEEK, Aug. 21, 1989, at 65; Division Seeks Documents From Colleges In Probe of Financial Aid and Tuition, 57 Antitrust & Trade Reg. Rep. (BNA) 278 (Aug. 31, 1989). 4 Eagle v. Star-Kist Foods, 812 F.2d 538 (9th Cir. 1987). The plaintiffs were fish- ermen paid by vessel owners on a price per ton-of-fish-caught basis. Since the plaintiffs were employees of the vessel owners, their injuries were derived from those suffered by the vessel owners. On that basis, the Ninth Circuit held that they lacked standing. 5 United States v. Howe, Crim. No. 87-00262 (E.D. Pa. July 21, 1987). 6 Monopsony exists when there is a single buyer of a good or service. GEORGE STIGLER, THE THEORY OF PRICE 216-18 (1987). 297

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