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Pattern bargaining

  • Robert Marshall
  • Antonio Merlo

Many unions in the United States have for several years engaged in what is known as pattern bargaining—a union determines a sequence for negotiations with firms within an industry where the agreement with the first firm becomes the take-it-or-leave-it offer by the union for all subsequent negotiations. In this paper, we show that pattern bargaining is preferred by a union to both simultaneous industrywide negotiations and sequential negotiations without a pattern. In recent years, unions have increasingly moved away from patterns that equalized wage rates across firms when these patterns did not equalize interfirm labor costs. Allowing for interfirm productivity differentials within an industry, we show that for small interfirm productivity differentials, the union most prefers a pattern in wages, but for a sufficiently wide differential, the union prefers a pattern in labor costs.

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Paper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 220.

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Date of creation: 1996
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Handle: RePEc:fip:fedmsr:220
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  1. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
  2. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
  3. Dobson, Paul W., 1994. "Multifirm unions and the incentive to adopt pattern bargaining in oligopoly," European Economic Review, Elsevier, vol. 38(1), pages 87-100, January.
  4. Daniel Diermeier & Roger B. Myerson, 1994. "Bargaining," Discussion Papers 1089, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Kathryn J. Ready, 1990. "Is pattern bargaining dead?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(2), pages 272-279, January.
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