otherwise would. American union membership has been falling for decades. Some possible reasons include

the shift of jobs to service industries; greater competition from globalization; the passage of worker-friendly

legislation; and U.S. laws that are less favorable to organizing unions.

14.4 Bilateral Monopoly

A bilateral monopoly is a labor market with a union on the supply side and a monopsony on the demand side.

Since both sides have monopoly power, the equilibrium level of employment will be lower than that for a

competitive labor market, but the equilibrium wage could be higher or lower depending on which side

negotiates better. The union favors a higher wage, while the monopsony favors a lower wage, but the outcome

is indeterminate in the model.
354 14 • Self-Check Questions

14.5 Employment Discrimination

Discrimination occurs in a labor market when employers pay workers with the same economic characteristics,
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