How unions affect prices indirectly?

Answer 1

Unions, like all enforced restraints of trade, are able to obtain rents in excess of fair market value. They are able to impose additional costs on producers that are generally recovered from customers in the form of higher prices.

Answer 2

Unions affect supply depending on their type of policy with respect to labour. In North America, this typically reflects three different types: open shop, closed shop, and Union shop. In general, a Union forms what is called a monopsony, a condition in a market when there is only one buyer of a good, since they become the only buyer of labour within a given firm or industry. As a monopsonist, they are given additional leverage in selling labour to the firm, which allows them to exploit monopsonist pricing (resulting in higher benefits and wages for Union members). However, such wage pricing also tends to lower the total amount of employment within the firm. In terms of production, higher costs may be incurred due to the higher input costs associated with Union labour, though productivity gains due to higher wages may counteract some of this effect.