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

Abstract

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). PIER Working Paper No. 01-032. Available at SSRN: https://ssrn.com/abstract=284948 or http://dx.doi.org/10.2139/ssrn.284948

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
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-7933 (Phone)
215-573-2057 (Fax)

HOME PAGE: http://www.ssc.upenn.edu/~merloa

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
122
Abstract Views
1,426
rank
207,844
PlumX Metrics