Monopsony Flashcards
Monopsonies are not wage?
Takers
What can monopsonies choose ?
Price or level of output , only way a monopsonist can increase amount of labour they employ is to increase WR which leads to an extension of supply
Reasons why monopsony power may exist
Unemployment - when high firms gain more monopsony power
Geographical immobility - work chosen on grounds of geographical immobility proximity or other non wage factors
Lack of information - theory of competitive labour markets assumed workers have access to diffrent jobs , wage rates and other potential sources of unemployment
What is the average cost to a monopsony of hiring each worker ?
AC= market wage rate
Why pay all workers the same
Legal requirements
Difficult to as certain the min each individual would be willing to accept
Paying new workers more would give firm incentives for workers to leave
