Is Wal-Mart a Monopsony?

1751 Words Nov 16th, 2006 8 Pages
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
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"In a response that nobody would have seen coming years ago; Coca-Cola yielded to an outside firm and designed a second product to meet Wal-Mart 's expectation." (2) This is a prime example of how Wal-Mart has used its power to sustain a supplier and make them change their product to suit their own needs. Ever year we see the power dwindle from the once big named retailers such as Winn Dixie, Albertsons, K-Mart, Toys R Us, and shifted upwards in Wal-Mart 's department.
"We should be most disturbed by the fact that Wal-Mart has gathered the power to dictate content, even to the most powerful of its suppliers." (1) Because no longer is Wal-Mart 's attention focused on the suppliers of t-shirts, electrical cords, and tube socks, every day Wal-Mart expands their reach into markets for magazines, music, and DVD 's. In another act to control their product share was made when Wal-Mart decided to allow each individual pharmacist in the company to choose whether or not to stock the morning after pill. In some areas Wal-Mart is the only place for people to purchase this kind of pill, and since they now do not stock it people are forced to live by their political ideals. "This was a political decision was made and enforced by a private monopoly." (2)
The huge retailer is "a progressive success story that has brought huge benefits to the American middle class."(3) This is an argument in the defense

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