ABSTRACT
In the last chapter the emphasis was on imperfect competition amongst buyers of input. In this chapter we turn our attention to imperfect competition between sellers of inputs. First we consider the case where the inputs are supplied by monopolistic profit-maximizing firms, and then we go on to consider the particular problems arising in labour markets where monopolistic elements are introduced through collective bargaining. In considering the problem of supplies by a monopolistic firm, our earlier analysis of monopoly has already adequately covered the case of a monopolist selling to price-taking buyers, whether they are competitive firms or individuals buying for private consumption. We can, therefore, concentrate here on the case where a monopolistic seller is trading with a monopsonistic buyer – a situation often referred to as bilateral monopoly because there is monopoly on both sides of the market. When we turn to labour markets, however, we will broaden the discussion to include both competitive and monopsonistic buyers.
