3. When a town has a single university, the university may have monopsony power

Question

3. 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.)

5. Suppose a union obtains a union shop agreement with firms in a particular industry. Is there any limit to the wages the union can achieve for its workers?

8. In 2005–06 the maximum salary of professional basketball players with up to three years of experience in the Women’s National Basketball Association (WNBA) stood at $42,000, while the maximum salary for a WNBA player in 2005 was $90,000 (the average was somewhere between $46,000 and $60,000 (depending on whether one’s source was the Players Union or the WNBA league itself). The minimum salary of a (male) rookie professional NBA basketball player in 2005–06 was $398,762 (WNBA rookies earned only slightly more than $30,000 that year). The average NBA salary in 2005–06 was $4,037,899. Why was there such a large discrepancy?

Explanation / Answer

3. Monopsony is a market situation having single large buyer and many seller. In the case of single university the university is single buyer and have monopsony power for part time faculty. But for dull time it has to follow university commission and the norms of government as it is at national level where there are many universities following government and offerin azms per govt rule. This is a situation of perfect competition.

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