Wage negotiations in baseball can fit the bilateral monopoly situation when a star player negotiates with an owner. Explain how collective bargaining would be used in wage negotiations and the role of player strikes.
What will be an ideal response?
Collective bargaining asks the player and the owner to submit a wage. The mediator then seeks a compromise (although in baseball, the mediator simply chooses the player or the owner wage). Strikes give credibility to player demands. If strikes were disallowed, owners would be less likely to agree to mediation.
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