Ohio School Milk Case
The Ohio school milk case
Table of contents
1. Introduction.............................................................................................. 3
2. Market characterization............................................................................. 4
2.1. Definition of a free competitive market................................................ 4
2.2. Definition of a collusive oligopolistic market....................................... 4
2.3. Description of the Ohio school milk market.......................................... 5
3. Key economic issues................................................................................. 5
4. Economic analysis.................................................................................... 6
5. Conclusion................................................................................................ 8
References
List of figures
1. Introduction
Economists generally favor the idea of a free competitive market consisting of a free and fair competition among companies and businesses within a particular market resulting in the production of goods and services of higher quality at cheaper prices. Unfortunately, conditions of perfect competition are hard to find in real life and almost unattainable (Wehmhoerner and Jutten, 2009).
This paper will deal with the so-called “Ohio school milk case” which took place during the 1980s – details of the school milk procurement process, bidding data and demand- and supply side characteristics where examined by Porter and Zona(1999). In their article: “Ohio school milk markets: An analysis of bidding.”, the public procurement market gets introduced. Every year, the school district officials solicit bids on annual supply contracts for milk and other products. The dairies who are able to supply the schools with milk will then submit bids on procurement contracts and the lowest bidder will usually be allowed to supply the school with milk for
Table of contents
1. Introduction.............................................................................................. 3
2. Market characterization............................................................................. 4
2.1. Definition of a free competitive market................................................ 4
2.2. Definition of a collusive oligopolistic market....................................... 4
2.3. Description of the Ohio school milk market.......................................... 5
3. Key economic issues................................................................................. 5
4. Economic analysis.................................................................................... 6
5. Conclusion................................................................................................ 8
References
List of figures
1. Introduction
Economists generally favor the idea of a free competitive market consisting of a free and fair competition among companies and businesses within a particular market resulting in the production of goods and services of higher quality at cheaper prices. Unfortunately, conditions of perfect competition are hard to find in real life and almost unattainable (Wehmhoerner and Jutten, 2009).
This paper will deal with the so-called “Ohio school milk case” which took place during the 1980s – details of the school milk procurement process, bidding data and demand- and supply side characteristics where examined by Porter and Zona(1999). In their article: “Ohio school milk markets: An analysis of bidding.”, the public procurement market gets introduced. Every year, the school district officials solicit bids on annual supply contracts for milk and other products. The dairies who are able to supply the schools with milk will then submit bids on procurement contracts and the lowest bidder will usually be allowed to supply the school with milk for
References: Lanzillotti, R. F. (2000). Great school milk conspiracies revisited. Review of Industrial Organization, 17(3). Lipsey, R. G., Courant, P. N., Purvis, D. D.,& Steiner, P. O. (1993). Economics (10th edition). New York: HarperCollinsCollegePublishers. Perloff, J. M. (2009). Microeconomics (5th edition). Berkley: Pearson Education, Inc. Pesendorfer, M. (2000). A study of collusion in first- price auction. Review of Economic Studies, 67(3). Porter, R. H., & Zona, J. D. (1997). Ohio school milk markets: An analysis of bidding. RAND Journal of Ecnonomics, 30(2). Sloman, J. (2003). Economics (5th edition). Essex: Pearson Education Limited Wehmhoerner, N.,& Jutten, E