Question

What is collective bargaining, and why is it valuable to employees? What is the difference between a monopoly and a monopsony? Give an example of each.  

Answer 1

• Collective bargaining refers to the negotiations that occur between the employer's and a group of employees in regard to the wages, working hours, or any other disputes that can only be solved by negotiations or discussions.
• Collective bargaining seems to be very valuable to the employees as it strengthens their presence in the company and their union power.
• It allows them to be actively involved in the negotiations and decision making with their employers which motivates them more and leads to an increase in the productivity.
• It also uplifts their morale and self respect which lets them works efficiently.

Difference between monopoly and monopsony :

• A monopoly is a market structure characterized by a single firm selling unique goods and services to its customers in a product market while a monopsony is also a market structure where a single firm sells products to its customers in a factor Market.
• The main difference between the two is that in a monopoly market a single firm enjoys all the market power by controlling the market while in a monopsony market, a single buyer dominates the entire market.
• This allows the monopoly firm to charge higher than normal prices for its goods and services while the single dominant buyer can take advantage of his power and can get goods and services for low Price.
• Microsoft and windows are the two main examples of monopolies as both are single sellers in their own market's and enjoy all the power due to the absence of near competitor's.
• As for a monopsony, large super markets exhibit monopsonist like behaviour, as they dominate the supply market by purchasing large quantities of goods from the suppliers which brings down the prices they pay to the suppliers.