Bargaining power

Bargaining power is a party’s ability to shape negotiated terms and outcomes. It depends on alternatives, resources, information, and the costs each side faces if agreement fails.

Best alternative to a negotiated agreement: The most advantageous course available to a party if negotiation produces no agreement. A strong alternative limits what the other party can demand.
Outside option: A course of action available to a party apart from the agreement under consideration. The value of an alternative shapes how much a party can risk rejecting a deal.
Collective bargaining: Negotiation between employers and groups of workers, usually represented by a union, over employment terms. Workers combine their negotiating position to seek better pay and conditions.
Market power: A firm’s ability to profitably influence market prices or other competitive conditions. Market power concerns market behavior; bargaining power concerns terms negotiated with a counterpart.
Bargaining solution: An agreement or outcome produced by parties’ bargaining process. The distribution of bargaining power helps shape the terms ultimately reached.
Reservation price: The least favorable price at which a buyer will buy or the highest a seller will accept. It marks the boundary beyond which a party prefers walking away.
Switching costs: Costs incurred when changing from one product, service, supplier, or arrangement to another. High switching costs can leave a party dependent on its current counterpart.
Buyer power: The ability of a buyer to influence the price or terms offered by sellers. Large or well-organized buyers can press suppliers for concessions.
Monopoly: A market structure in which one seller supplies a product with no close substitutes. A monopoly can create strong seller leverage, but the concepts are not interchangeable.
Economic surplus: The gains from an exchange beyond the minimum benefits required for parties to participate. Power affects how the gains from a mutually beneficial deal are divided.

Linked from 12 pages