Pattern Bargaining

46 Pages Posted: 25 Sep 2001

See all articles by Robert C. Marshall

Robert C. Marshall

Pennsylvania State University, College of the Liberal Arts - Department of Economic

Antonio Merlo

University of Pennsylvania - Department of Economics; Rice University

Multiple version iconThere are 2 versions of this paper

Date Written: October 1999


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 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.

JEL Classification: J50, L13

Suggested Citation

Marshall, Robert C. and Merlo, Antonio M., Pattern Bargaining (October 1999). Available at SSRN: or

Robert C. Marshall

Pennsylvania State University, College of the Liberal Arts - Department of Economic ( email )

524 Kern Graduate Building
University Park, PA 16802-3306
United States
814-865-0030 (Phone)
814-865-0013 (Fax)

Antonio M. Merlo (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
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Philadelphia, PA 19104-6297
United States
215-898-7933 (Phone)
215-573-2057 (Fax)


Rice University ( email )

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United States

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