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Wage bargaining and monopsony

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  • Falch, Torberg
  • Strom, Bjarne

Abstract

This paper identifies three possible outcomes of higher relative firm bargaining power in a unionized firm facing an upward sloping labor supply curve. The conventional regime with reduced wage and higher employment corresponds to firm bargaining power below a certain critical value. A supply constrained regime where increased firm bargaining power reduces both wages and employment occurs when the bargaining power is above another critical level. A novel result is that we identify a third regime, with firm bargaining power between these critical levels, where changes in relative bargaining power does not affect wages and employment.
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  • Falch, Torberg & Strom, Bjarne, 2007. "Wage bargaining and monopsony," Economics Letters, Elsevier, vol. 94(2), pages 202-207, February.
    • Handle: RePEc:eee:ecolet:v:94:y:2007:i:2:p:202-207
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    4. Tomer Blumkin & David Lagziel, 2024. "Asymmetric market power and wage suppression," Scandinavian Journal of Economics, Wiley Blackwell, vol. 126(1), pages 38-59, January.

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    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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