... into the market and hire away part of the work force. Chapter 15 Competitive and Monopsonistic Labor Markets 14 The Cost of Labor Monopsony power reduces the costs of competitive hiring. ... supply and demand. To understand why a person earns what he does, then, we must first consider the determinants of the demand and supply of labor. The Demand for Labor The demand for labor ... “Reward Systems and the Distribution of Wages,” Journal of Law, Economics, and Organizations, vol. 7 (special issue), 1991, pp. 130 -158 . Chapter 15 Competitive and Monopsonistic Labor Markets ...