Opinion ID: 775962
Heading Depth: 3
Heading Rank: 3

Heading: Inelastic Demand

Text: 52 Concluding its discussion of the susceptibility of the market to tacit coordination, the district court stated that plaintiff has pleaded no facts tending to establish that the demand for these `products' is inelastic. Todd, 126 F. Supp. 2d at 327. We disagree. This part of the inquiry, easily confused with the cross-elasticity and interchangeability analysis that is used to define the relevant market, traditionally asks whether demand is inelastic because buyers place orders only for immediate, short-run needs. Container Corp., 393 U.S. at 337; see also, e.g., Flav-O-Rich, 593 F. Supp. at 15 (With the obvious short-term life span of milk, orders are, by necessity, placed on the basis of short-term needs.). In other words, the question is whether it is economically feasible for buyers to abstain from purchasing the product for some period of time. 53 Here again, we reverse the equation in the context of an oligopsony. Where market power is exercised by buyers, it is the elasticity of the sellers' supply that is at issue. Sellers' supply could be elastic if, for example, they have the option of withholding some output from the market in hopes of higher prices in future years. Blair & Harrison, supra, at 313. If, however, the goods are perishable, short-run supply may be quite inelastic. Id. In this case, the supply at issue is the labor of the MPT employees. Labor is an extremely perishable commodity - an hour not worked today can never be recovered. Id. at 314. As a result, [c]ollusion among employers can drive the wage down to the individual's reservation wage. Id. As labor is a classic example of inelastic supply flow, it is unclear what additional facts plaintiffs would have to allege with regard to this aspect of the inquiry. 54 In sum, the pleadings support the contention that the market was susceptible to tacit coordination by the defendant companies: The market is sufficiently concentrated under Container Corp.; the defendants have in effect manufactured a form of fungibility through sophisticated comparison techniques; and the supply of labor has an inherently inelastic quality.