In a labor market characterized by bilateral monopoly, such as a union and a single firm employing union members, the wage rate is:

Question

Quizplus · Accepted Answer

In a bilateral monopoly, both the union and the firm have the power to influence wages and neither party has a competitive alternative. Therefore, the wage rate is determined through negotiations and depends on the relative bargaining strengths of the union and the employer. The final wage rate is usually somewhere between the wage sought by the union and the level desired by the employer. Thus, the wage rate is theoretically indeterminate and not established at a fixed level.

In a Labor Market Characterized by Bilateral Monopoly, Such as a Union