The affect that Trade Unions can have on Monopsonists can be shown a graph.
It's important that you understand the concept the MRP and Perfectly competitive labour markets.
The graph is a simple MRP and Labour supply curve. However there is an extra curve that represents the monopsonist company, in this case the UK Government.
QL (M) - Quantity of labour supplied under monopsonist conditions and RW (M) - Real Wage under monopsonist conditions shows a monopsonist firm/industry with little or no unionised workforce.
QL (TU) - Quantity of labour supplied, under monopsonist conditions BUT with Trade Union support and RW (TU) - Real wage under monopsonist conditions BUT with Trade Union support shows a monopsonist firm/industry with full Trade Union support.
The QL (PC) and RW (PC) is what the Real Wage and Quantity of Labour supplied would be if the Labour market was perfectly competitive, however that would be highly unlikely and that situation probably unachievable as workers aren't homogeneous, there is asymmetric information and they are able to change their wages through Trade Unions!
Comments
No comments have yet been made