6.4 imperfectly competitive labour markets Flashcards
what is the definition of a monopsony
only one buyer in the market e.g. raw materials or labour, therefore they have market power in bargaining
what is monopsony power?
market power exercised by the buyer of a good or services of FOP such as labour even though the firm isn’t a pure monopsonist
what are the features of a pure monopsonist labour market
their is only one employer so workers can’t choose who to work for closest to this extreme is the army
what is an example of a firm who have monopsony power in the labour market
employing nurses, teachers employed both employed by the state
what is the difference between monopsony and monopoly
monopoly is the sole supplier whereas monopsony is the sole buyer of a resource
features of monopsony in labour market
wage makers (don’t take ruling market price as they are the only buyer)
they will maximise revenue from workers by hiring up to MRP=MC
employment and wages reduced (see diagram/draw diagram)
why are their wage differences in imperfectly competitive markets (5 reasons)
disequilibrium trading- as economies are subject to constant change (new goods services etc.) , labour markets are usually at disequilibrium
imperfect market information, workers sometimes lack accurate information on rates of pay same with firms
occupational immobility of labour, when workers can’t move between jobs due to natural or artificial barriers e.g. lack of natural ability or membership qualifications
geographical immobility of labour, workers are unwilling or unable to move from one area of work to another, e.g in UK southern house pricing being to high so northern workers can’t move down in search of work
discrimination- gender, racial religious affect d and s of labour e.g. firms may not employ certain types of workers
