Bargaining Power  

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
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