Study Guide to Man, Economy, and State with Power and Market

Chapter 10: Monopoly and Competition 127
concepts. All we can discuss is the unhampered price that
would emerge on a free market.
E. Some Problems in the Theory of the
Illusion of Monopoly Price
Certain “obvious” cases—such as so-called location
and natural monopolies—may make the preceding section’s
arguments appear incredible. Yet even in these
cases, a careful analysis shows that either there are
monopolies everywhere (in which case the concept is vacuous),
or there are no monopolies (in which case it is
irrelevant). Only when the government grants a privilege
backed up by force is the concept of monopoly significant.
4. Labor Unions
A. Restrictionist Pricing of Labor
Although a union presents a coherent example of
restriction of output and the achievement of higher
prices, this is not an example of monopoly; the privileged
workers gain at the expense of nonunion members.
B. Some Arguments for Unions: A Critique
A typical argument for unions is that the marginal
productivity determination of wage rates, in practice,
leads not to a unique value but rather a zone of possible
wage rates. In this view, the union’s function is to use its
collective bargaining power to achieve a wage rate on the
high end of the zone of mutually advantageous wages.
The problem with such a justification is that such zones
of indeterminacy shrink as more and more people enter