Microeconomics Research Paper
This is a Microeconomics research paper chapter on Unions:
Unions play an important role in many businesses, such as airlines, and often aid in decision-making. Such is the case in the article “United Machinists’ Union Approves Pay Concessions”, by Edward Wong from the May 1, 2003 New York Times. Since the airline is in danger of bankruptcy, the union “members are providing United Airlines with the means and opportunity to successfully restructure and avoid liquidation.” In order to do so, the machinists’ union voted to give the company a total of $794 million a year in wage and benefit concessions over the next six years. As a result, wage cuts range from nine percent for flight attendants, thirteen percent for machinists, and thirty percent for pilots.
Airlines are an oligopoly in the United States. Oligopolies are market structures where a few firms distribute a product, either standardized or differentiated. Entry into this market is often difficult, and a firm has limited control over product price because of mutual interdependence, and there is typically non-price competition. There are a few large airlines that get most of the traveling business, and differentiation is limited. Since September 11 however, business has been slow, with most people opting not to travel by airplane. As a result, many airlines, including United Airlines, have been close to bankruptcy. Read more…
