Pattern bargaining

Robert C. Marshall, Antonio Merlo

Research output: Contribution to journalArticle

25 Scopus citations

Abstract

Many unions in the United States have for several years engaged in what is known as pattern bargaining. In this article, we show that pattern bargaining is preferred by a union to both simultaneous industry-wide negotiations and sequential negotiations without a pattern. Allowing for interfirm productivity differentials within an industry, we show that for small differentials, the union most prefers a pattern in wages, but for a sufficiently wide differential, the union prefers a pattern in labor costs. Finally, we demonstrate that pattern bargaining can be a significant entry deterrent. This provides an explanation for why incumbent firms in an industry may support the use of pattern bargaining in labor negotiations.

Original languageEnglish (US)
Pages (from-to)239-255
Number of pages17
JournalInternational Economic Review
Volume45
Issue number1
DOIs
StatePublished - Feb 2004

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All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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