Sellers can also exercise power to set price A factor can be sold by a monopoly firm, which is likely to behave in a way that corresponds to the monopoly model When there are a large number of sellers, they may band together in an organization that seeks to exert a degree of market power on their behalf Workers (sellers of labor), for example, have organized unions to seek better wages and working conditions This goal can be accomplished by restricting the available supply or by increasing the demand for labor When a union represents all of a monopsony firm’s workers, a bilateral monopoly exists A bilateral monopoly results in a kind of price-setters’ standoff, in which the firm seeks a low wage and the union a high one Professional associations may seek to improve the economic position of their members by supporting legislation that reduces supply or raises demand Some agricultural producers join producers’ cooperatives to exert some power over price and output Agricultural cooperatives must be authorized by Congress; otherwise, they would violate laws against collusion in the marketplace CONCEPT PROBLEMS Unions have generally advocated restrictions on goods and services imported from other countries Why? There is a growing tendency in the United States for hospitals to merge, reducing competition in local markets How are such mergers likely to affect the market for nurses? When a town has a single university, the university may have monopsony power in the hiring of part-time faculty But what about the hiring of full-time faculty? (Hint: The market for full-time faculty is a national one.) Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 775