From Labor Market Theory to Antitrust Policy: A Conversation with Ioana Marinescu

On this episode of Ruled by Reason, AAI Senior Counsel David O. Fisher talks with leading economist Ioana Marinescu about the theoretical frameworks underpinning labor monopsony and how they apply in various antitrust law and policy contexts.

The conversation centers on Marinescu’s recent paper with coauthor José Azar, Monopsony Power in the Labor Market: From Theory to Policy, which lays out the theoretical frameworks underlying monopsony power in labor markets and develops a theory-informed discussion of antitrust law and policy. The conversation begins with an examination of Marinescu’s background and her research on labor markets and monopsony power (3:15). She then explains the three main theoretical frameworks underpinning labor monopsony as reflected in the literature: oligopsony, differentiated jobs, and search-and-matching frictions (10:04).

The conversation then moves to a discussion of how economists determine which models to apply in which context (18:47). In the enforcement context, Marinescu examines the usefulness of each framework in the context of enforcing against no-poach and wage fixing agreements (21:24), and underscores the significance of a 2023 study by Tania Babina and co-authors which finds that antitrust enforcement against anti-competitive conduct tends to increase overall employment and business formation (26:48). Marinescu also discusses merger enforcement, and how each of the three theoretical frameworks apply in the merger context as reflected in the 2023 Merger Guidelines (30:53). Finally, she examines the theoretical work supporting the FTC’s Noncompete Rule, and whether it supports the agency’s current approach of addressing noncompete clauses on a case-by-case basis (35:24).

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Ioana Marinescu is an associate professor at the University of Pennsylvania School of Social Policy & Practice, with secondary appointments in the Economics Department and the Wharton School of Business (BEPP), and a research associate at the National Bureau of Economic Research. Her pioneering research on wages and monopsony power led to her appointment as principal economist at the U.S. Department of Justice Antitrust Division (2022-2024).