Bargaining Power is the ability for firms or workers to get what they want.
An example of bargaining power is related to the power of trades unions. If a single worker works for a monopsonistic employer is bargaining power is very weak and he is likely to get paid a low salary.
However, if workers join a trade union and achieve 100% density (i.e. everyone in the firm joins) then they have the capacity to influence the wage making process.
Bargaining power of Trades Unions will increase when
- 100% Density
- Low Rates of Unemployment
- Profitable Firm
- Political support for Union
- Union funds for a long term strike
- If they are producing a key good