would likely pressure the union to lower its demands unless strike benefits were equivalent to present wages or equivalent alternative employment were available. On the other hand, an employer that sells products -competitive market may accept a relatively large wage in a demand because the costs can be largely passed on to consumers, and it might forgo substantial lost profits or permanently reduced market share f it had to endure a long strike. The elasticity of demand for products has a major effect on bargaining power Union bargaining power is enhanced when the employer has a monopoly in the product or service market because the demand for its output is relatively more inelastic than it would be in a competitive market. ty with only one food store For example, consumers in a remote communi would be at its mercy. As prices increased, they might buy less of each o rise with lower volume food group, but total revenues would because the community would need to eat. Unionization elasticizes the labor supply at the contract wage, as long as the wage is above the competitive market wage. When unions are able to organize an employer in a purely competitive industry, negotiating a wage increase (other things being equal) will necessarily lead to a reduction in employment as the employer will be forced to replace labor with capital or to cut back on employment in the short term to remain profit is to the union's benefit to cooperate in creating a more able. Thus, inelastic demand curve in the employer's product market. remote food store example should be clerks' union in the able to gain a large wage increase because the cost can be passed through to the store's customers. But how might the union gain a wage increase in a large city with hundreds of food stores? By bargaining in a unit that stores, each store will pay the same wage increase and will includes a attempt to pass the increase through to consumers simultaneously. No store with the same capital labor mix would gain a competitive advantage. Less motivation would exist for any single store to resist a wage increase because all stores would encounter the same wage outcomes, leading to relatively little impact on the volume of sales if the market demand curve is relatively inelastic. To gain bargaining power, the union encourages the formation of a multiemployer bargaining unit;and the employers usually find this to be in their interest because no one is placed at a competitive disadvantage when contracted wages increase, as long as there are no new nonunion entrants.
would likely pressure the union to lower its demands unless strike benefits were equivalent to present wages or equivalent alternative employment were available. On the other hand, an employer that sells products -competitive market may accept a relatively large wage in a demand because the costs can be largely passed on to consumers, and it might forgo substantial lost profits or permanently reduced market share f it had to endure a long strike. The elasticity of demand for products has a major effect on bargaining power Union bargaining power is enhanced when the employer has a monopoly in the product or service market because the demand for its output is relatively more inelastic than it would be in a competitive market. ty with only one food store For example, consumers in a remote communi would be at its mercy. As prices increased, they might buy less of each o rise with lower volume food group, but total revenues would because the community would need to eat. Unionization elasticizes the labor supply at the contract wage, as long as the wage is above the competitive market wage. When unions are able to organize an employer in a purely competitive industry, negotiating a wage increase (other things being equal) will necessarily lead to a reduction in employment as the employer will be forced to replace labor with capital or to cut back on employment in the short term to remain profit is to the union's benefit to cooperate in creating a more able. Thus, inelastic demand curve in the employer's product market. remote food store example should be clerks' union in the able to gain a large wage increase because the cost can be passed through to the store's customers. But how might the union gain a wage increase in a large city with hundreds of food stores? By bargaining in a unit that stores, each store will pay the same wage increase and will includes a attempt to pass the increase through to consumers simultaneously. No store with the same capital labor mix would gain a competitive advantage. Less motivation would exist for any single store to resist a wage increase because all stores would encounter the same wage outcomes, leading to relatively little impact on the volume of sales if the market demand curve is relatively inelastic. To gain bargaining power, the union encourages the formation of a multiemployer bargaining unit;and the employers usually find this to be in their interest because no one is placed at a competitive disadvantage when contracted wages increase, as long as there are no new nonunion entrants.
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