A competitive labor market
A competitive labor market is characterized by many buyers and sellers. There are free entry and exit in this structure. In this market, the forces of demand and supply influence the prices. The marginal product and marginal revenue determine the wage rate in a competitive market. In a competitive labor market, workers have to be paid in accordance with the prevailing wage rate. If an employer pays less than the wage rate, they will have no one willing to work for them.
A Monopsony is a market structure composed of only one buyer. In this market, the wage rate is determined by the marginal cost, marginal revenue, and employment level. A monopsonist can pay any wages depending on the above factors.
I agree with the concept that wages are not the same in different market structures. Participants in different markets face different levels of competition. Since the revenues and costs are not the same, wages have to be different based on firms’ conditions in the market?
Reply to post 1
I agree with you that wages differ between labor markets for several factors, including cost. You have raised the point of special training. But I have a question here: Are there some types of markets which do not require trained personnel?
Reply to post 2
I concur with you that firms have different wages due to the different situations they face in the market. No firm would pay a higher wage as it would incur losses. Similarly, a lower wage rate would mean a loss of the labor force.