The classic example of monopsony is the “company town” – a small community in which a single firm is the dominant employer. In extreme examples, companies have owned and managed all housing, stores, and health-care facilities in such towns. Of course, the coming of the automobile put an end to most of these towns. It did not necessarily bring a complete end to monopsony power for some businesses. For example, imagine being a licensed practical nurse in a remote area with relatively few doctors and a single hospital largely managed by those same doctors. Avoiding some monopsonistic exploitation might be difficult because it could be difficult to obtain information about alternative job openings for nurses in home health care or nursing-care facilities within commuting distance of your home.

Today, however, the opportunities for a nurse in this situation are likely to improve if she logs on to web sites such as Monster.com, ihirenursing.com, Careerbuilder.com, or Indeed.com. These and other web sites post job listings sent by company recruiters and help wanted ads from many locations. Some of these sites allow job seekers to post their résumés, and others even collect data from job seekers and then e-mail them potential matches. Increasingly, the Internet is blurring the distinction between “local,” regional, and national labor markets, making it harder for any firm to exercise much monopsony power.

If a local hospital faces little or no competition from other hospitals, is it possible for it to exploit its nursing employees even if it has no monopsony power?