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Kentucky Milk Case

By | November 2011
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Kentucky Milk Case

Each year, Kentucky invites bids from dairies to supply half-pint containers of mild products to its school districts. The products include whole milk, low-fat milk, and low-fat chocolate milk. In 13 school districts (called Tricounty) , the suppliers were accused of price-fixing – conspiracy to allocate the districts so that the “winner” is predetermined. Between 1983 and 1991, two dairies – Meyer dairy and Trauth dairy – were the only bidders in these 13 school districts. Consequently they were awarded all the milk contracts in these districts. (In other districts, called Surround, a large number of different dairies won the contracts).

You have data available from 392 bids (between 1983 and 1991) to determine if there is evidence of bid collusion. What analysis will you run, and what do you conclude.

|Variable |Type |Description | |YEAR | |Year in which milk contract awarded | |MARKET | |Tricounty or Surround | |WINNER | |Name of winning dairy | |WWBID | |Winning bid price of whole milk (dollars per half pint) | |WWQTY | |Quantity of whole milk purchased in half-pints | |LFWBID | |Winning bid price of low-fat milk (dollars per half pint) | |LFWQTY | |Quantity of low-fat milk purchased in half-pints | |LFCBID | |Winning bid price of chocolate milk (dollars per...

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