Question

Why are unions stronger in the sectors which have imperfect competition in the product market?

Answer 1

Unions stronger in the sectors which have imperfect competition in the product market because :-

1) The demand for the product is inelastic – this means firms are more likely to meet wage demands.

2) The product or service is a strategic one – such as power worker’s unions, or the union of transport workers.

3) Labour is concentrated in one geographical area – such as coal miners in South Wales.

4) Labour represents a small share of total cost – such as airline pilots (in relation to total costs).