Does Amazon monopsony lead to higher prices?

A number of you have questioned that point I made yesterday, arguing that a standard monopolist that becomes a monopsonist will restrict output by hiring less labor, for fear of driving up the price of that labor.

I don’t think Amazon has significant monopsony power in many if any labor markets, but it does have some monopsony power over say book publishers.  Amazon uses this power to force down book prices and that in turn forces down author advances to some degree.  Amazon sells more books and that does mean higher output and lower prices, contrary to what the critics are charging.

Keep in mind also that Amazon is (mostly) a platform company.  It’s not their goal to someday put all their competitors out of business and jack up the price of paperbacks to $35.  Rather, they seek to flood the market with output, investing in brand name, better data, talent hiring, acquired logistics skills, and so on.  To the extent Amazon has monopsony power (again, fairly limited outside of books), they can bargain down costs and flood the market even more, playing into this core strategy, again involving lower rather than higher prices.