WAGES UNDER IMPERFECT COMPETITION
We have discussed above wage determination under perfect competition. But in the world of reality How to Stop Exploitation. The two weapons to stop exploitation are (a) Government action and (b) Trade Union action. Since monopolistic exploitation arises from the monopoly power of the employer .it cannot be stopped either by the trade union or the government calling upon the employer to raise waves. If the trade unions compel the employers to pay high wages. they can reply by employing smaller number of workers so as to equate the new higher wage with the marginal revenue product of labor. Since the value of marginal product (VMP) will be greater than the marginal revenue product (MRP). labor will still be exploited. The only way to remove exploitation is to create conditions of perfect competition in the product market. The government can take some measures for remove monopolistic conditions. In the case of monopolistic competition. the trade union or the government can remove exploitation by raising wages.
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