Scope and method of study. This paper sought to analyze and discuss the ability of hospitals to use monopsony status to suppress wages for nursing professionals. Recent market developments, including the impact of government policy changes, were discussed. Monopsony models were examined to demonstrate the relationship between greater employer buying power and lower levels of wages and utilization for labor. Data for registered nurses in Oklahoma were evaluated in an effort to determine the factors relevant to wage and employment levels. A two stage, least squares (2SLS), simultaneous equations technique was applied to the data and adjustments were made to correct for possible biases resulting from market power.

Findings and conclusions. Wage disparities between hospitals were largely explained by factors other than buying power. Two separate, short run, hospital labor supply elasticity estimates of 2.72 and 5.62, as well as an inability of demand variables to explain RN wage variation, suggested that average monopsony power was weak.