Preference revelation and monopsony

(1) Johnson demonstrated the formal equivalence between the free-rider problem and monopsony. (2) Vickrey's method for eliminating the inefficiencies resulting from monopsony (monopoly) works by converting simple monopsonists (monopolists) into perfectly discriminating monopsonists (monopolists). (3) We show that three recently proposed solutions to the free-rider problem have the same rationale, i.e. they use ‘Clarke taxes’ to convert Johnson's simple monopsonists into perfectly discriminating monopsonists. The three mechanisms are those of: (i) Clarke and Groves; (ii) Groves and Ledyard; and (iii) Arrow. The relationships between these mechanisms, and between each of them and monopsony, are analyzed diagrammatically.