The Navy and Newport News: A Case Study of a Monopoly-Monopsony Duet

Abstract

<p>The U.S. Navy and Newport News Shipbuilding have between them created an unusual - probably unique - monopoly-monopsony duet, in this case for construction and refueling of nuclear aircraft carriers. Monopoly-monopsony dynamics captured a modest amount of theoretical attention, beginning with Francis Y. Edgeworth in the late 19^th century. These analyses generally agreed such markets required a kind of collaboration between buyer and seller unlike the usual dynamic of competitive or monopoly-multiple customer markets. This conclusion is tested and confirmed through a story of the history of the formation of the Navy-Newport News monopoly-monopsony duet.</p>