Unions using zoning laws against Wal-Mart

In a previous post, we have shown how competitors use local zoning laws to keep rivals out, e.g., Starbucks. Now we see labor unions employing the same tactic against Wal-Mart.

Union workers fought the opening of the Supercenter last fall, arguing that the retail giant's foray into discount groceries would undercut better-paying, union jobs at chains like Albertsons and Safeway.

If labor unions can slow down or block rival entry that erodes profitability, then incumbent grocery stores are more profitable, which raises the gain to reaching agreement with the union. From our textbook (Chapter 14 Bargaining),

By increasing your opponent’s gain from reaching agreement, you make him more willing to compromise to reach an agreement, weakening his bargaining position.