ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 103 
of X to Y will now be B to A, and in consequence the mar- 
ginal productivity of X will rise to, let us say, P; and that 
of Y will fall to P,. But this will create no further change in 
the quantities of either, so that as long as these quantities are 
unchanged, X can continue to enjoy the greater return which 
will come from its higher marginal productivity. Except for the 
limitations in the productivity curve there is no limit to the 
increased per unit gains which a factor can enjoy if by limiting 
its supply it can increase its bargaining power. Where both 
factors have therefore absolutely inelastic supplies, the argu- 
ments of the so-called bargain theorists, that the result will 
depend on the relative bargaining strength of the two factors, is 
approximately true if we take as our test of bargaining power, 
the relative changes in position and slope of the supply curves. 
But this interpretation 
of bargaining power is one 
that has been little un- 
derstood by the bargain 
theorists themselves. The 
ultimate unit return of X 
may therefore be repre- 
sented by P; instead of 
by P as was originally 
the case, while the ulti- 
mate return to Y may be 
shown as P, instead of P 
as at first. 
Let us assume, however, 
another case in which X 
is completely inelastic and 
Y has unit positive elasticity. (Figure 18.) Then if we indi- 
cate an increase in the effectiveness of X's bargaining power 
by shifting it to the left to B and designating its supply curve 
by BS., we have the ratio of the quantity of X to Y as one 
of B to A instead of A to A as before. The unit return to 
X will in consequence rise to let us say P, and that to Y 
will fall to P, in consequence of the forces which have been 
so often mentioned in this essay. But while the increase in pay- 
ment to X will not lead to any increase in its supply, the dimin- 
ished return to Y will cause the supply of this factor to diminish 
Fig. 18