Overview: Bargaining Power | ||
Function | ||
Definition | The ability to exert influence in negotiations. | |
Related Concepts |
What is Bargaining Power? John Spacey, updated on
Bargaining power is the relative power of parties to exert influence over each other in negotiation. It's typically measured by how much it costs each party to fail to reach an agreement. For example, in hiring a new employee a company may have much to lose if the employee has rare skills and is being hired to fill a urgent business need. The employee may need a job for financial reasons or may be relatively indifferent due to a secure position. These costs tend to affect how each side negotiates. In other words, people are typically stronger negotiators when they have little to lose.
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