I. Definitions and hypotheses, 36. — II. The evidence, 37; spreading of automatic wage increases during inflation, 38; automatic increases as a floor under wage changes during price stability, 48. — III. Conclusions, 50; summary of the findings, 50; limitations of the findings, 51; mechanism by which GM-type agreements influence wage negotiations, 52; some implications of this study, 54. — Appendix: conceptual considerations, 55; methodological considerations, 57; some alternative views on the findings considered, 59.

T HE purpose of this paper is to reformulate the theory of pattern bargaining to enable it to account for variations among the results of wage bargaining within a given wage pattern. We shall start with an explanation of the inadequacy of the existing wage-pattern theory in view of the increased importance of variations within wage patterns. Next we shall introduce our proposed extension of the theory, the concept of minimum differentiation, which we shall illustrate with the aid of a specific example the differentiation of a wage pattern established by cost-of-living escalation. Finally, we shall test our hypotheses by comparing recent interindustry wage increases in the so-called auto-steel orbit.