In the introduction to this book, it was argued that the textbook perfectly competitive model of the labour market, where labour is treated essentially as a commodity in an auction, is not a good characterisation when workers have some bargaining power. It is well known that labour is characterised by certain features that distinguish it from other inputs. These features may in some circumstances give workers or management a degree of bargaining power. Some examples of these characteristics were provided in chapter 1. In general, in circumstances where it is costly for the firm to replace existing workers by outsiders, incumbent workers have some market power. And where it is costly for the worker to be laid off for whatever reason (be it loss of firm-specific human capital or because there are no alternative jobs), management will have some bargaining power. In such a situation of bilateral monopoly, emerging as a result of labour turnover costs, wages may be determined through a bargaining process rather than through an auction process. In principle, such bargaining may be either between individuals and management, or between an agent of the workers and management, where the agent could be a trade union. While bargaining may be more effective between a trade union and management, there may still be scope for individual bargaining with management in some production processes.