Oligopsony/Oligopoly Power and Factor Market Performance: The Case of U.S. Old Newspapers

Abstract

This paper derives price-cost margins for the old newspaper (ONP) input market for newsprint manufacture and then examines the effects of two government policies and two variables measuring the market performances of ONP input and newsprint output on the oligopsonist's ONP price-cost margins. In the wastepaper recycling market in particular, the ONP input market has not been successful in using the ONP generated. The outcomes of the study are that various degrees of price distortions existed in the ONP input markets in four regions of the United States during 1972–1995. Demand-side policy had a positive effect and supply-side policy had a negative effect on ONP price–cost margins in all regions.