The Kentucky Milk Case
Introduction
This case, the Kentucky milk case, includes awarding of bids to bidders seeking to provide services for governments, cities, states, and businesses based on scaled bids. In this scaled bids the contracts awards go to the lowest bidders. This system of awarding bids is only effective in cases where there are strict market competitions. However, in low competition market this system of scaled bid awards is not effective. This paper entails the analysis of the Kentucky milk case, which occurred between 1983 and 1990. The concern market in the case is a tri county and surrounds market, which is a relatively competitive market. The data record shows that the market is relatively a competitive one from the number of probable bidders and the rate of bid awarded to the winners in all the biddings.
Analysis
From the bids awards, certain milk companies dominate the winning of the bids to supply milk products for schools in the district. The surrounding market records the highest number of winning bids by large dairy farms. This pattern of events is attributed to by the following reasons. Fewer sellers and high market concentration demand, only a few dairy firms are in control of the market. The products sold are the same and essential to the consumer needs. The bidding cost is relatively same since the federal laws regulate the prices for raw products. The market pattern is also attributable to collusive market pattern, which may depend on a number of reasons as explained below.
Market share, the number of half prints shared can also depend on the market share, the market share under the analysis shows signs of stability with equal shares over time for the dairy firms. Market allocation is also another form of collusive behaviour that affects or dictates the bidding awards pattern in a given market. In this case, incumbency rates exceeding seventy percent affects the bid awards. Bid levels and dispersion in competitive market makes bidders to keep secret their bid level and prices. This is explainable from the awards where certain bidders win more bids frequently throughout all the bid cases. Lack or relation between the raw product and the actual product also affects the bid awards and patterns. Bid sequence, bidding submission for the school milk supplies takes place during the spring and summer months. Bidders who submit their bids on the right time may land the contracts more often than those who submit them before the stipulated period or long after the stipulated period. Comparison of average bid prices. In cases where bid are awarded to the highest bidders at the expense of the average or law bidders, bid rigging is a possibility. The winning price commonly known as the rigging price is always higher than the mean price in years where collusion occurs.
Sample Figure Representations the Bids Awarded Used in the Analysis
Year Market Winner WWBID WWQTY LFWBID LFWQTY LFCBID LFCQTY District KYFMO MilesM MilesT LetDate
1983 TRI-COUNTY MEYER 0.1260 76055 0.126 81645 . . 91 0.0764 14 11 06/20/83
1983 TRI-COUNTY TRAUTH 0.1495 626 0.1395 30702 . . 452 0.0764 4 0 06/02/83
1983 SURROUND HILL’S DAIRY 0.1400 . 0.135 . 0.143 . 101 0.0764 50 47 06/28/83
1983 TRI-COUNTY TRAUTH 0.1193 9026 0.1113 8987 . . 32 0.0764 4 2 07/20/83
1983 TRI-COUNTY MEYER 0.1094 51404 0.1094 292086 0.1094 429493 134 0.0764 3 1 07/06/83
1983 SURROUND CLOVERLEAF 0.1200 . . . . . 13 0.0764 36 34 07/18/83
1983 SURROUND CLOVERLEAF 0.1200 . 0.11 . 0.11 . 171 0.0764 64 62 07/21/83
1983 SURROUND BORDEN 0.1200 . 0.119 . 0.119 . 593 0.0764 36 32 07/11/83
1983 SURROUND TRAUTH . . 0.1143 . 0.1143 . 241 0.0764 54 51 07/19/83
1983 SURROUND CLOVERLEAF 0.1200 . 0.11 . 0.11 . 335 0.0764 72 72 07/11/83
1983 SURROUND FLAV-O-RICH 0.1225 . 0.1225 . 0.1225 . 393 0.0764 51 50 07/05/83
1983 SURROUND CLOVERLEAF 0.1200 . . . 0.11 . 455 0.0764 63 60 07/11/83
1983 SURROUND FLAV-O-RICH 0.1290 . 0.122 . 0.122 . 471 0.0764 48 44 07/01/83
1983 TRI-COUNTY TRAUTH 0.1064 14149 0.1064 6841 . . 26 0.0763 6 2 08/03/83
1983 TRI-COUNTY MEYER 0.1074 195944 0.1074 77752 0.1074 108528 35 0.0763 16 13 08/05/83
1983 TRI-COUNTY MEYER . . 0.0987 24360 . . 157 0.0763 12 8 08/11/83
1983 TRI-COUNTY TRAUTH 0.1110 12946 0.101 36776 0.101 117491 176 0.0763 7 4 08/08/83
1983 TRI-COUNTY MEYER . . 0.1026 192879 0.1026 1010377 291 0.0763 15 11 08/08/83
1983 TRI-COUNTY MEYER 0.1095 10387 0.1095 11750 0.1095 82409 354 0.0763 5 3 08/09/83
1983 SURROUND WILSON DIST. 0.1375 . 0.133 . 0.1425 . 191 0.0763 34 30 08/01/83
1983 SURROUND ROYAL CREST 0.1370 . 0.1116 . 0.1325 . 441 0.0763 107 105 08/29/83
1983 SURROUND CLOVERLEAF 0.1250 . 0.125 . 0.125 . 505 0.0763 49 46 08/29/83
1983 SURROUND THOMPSON-GLASS 0.1300 . 0.12 . 0.125 . 561 0.0763 59 56 08/10/83
1983 TRI-COUNTY TRAUTH 0.1293 650 0.1215 45920 . . 452 0.0763 4 0 09/12/83
1984 SURROUND CLOVERLEAF 0.1270 . 0.127 . 0.127 . 441 0.0741 107 105 05/14/84
1984 TRI-COUNTY TRAUTH 0.1325 0 0.1225 139020 . . 452 0.074 4 0 06/20/84
1984 SURROUND HILL’S DAIRY 0.1421 . 0.1377 . 0.1458 . 101 0.074 50 47 06/29/84
1984 SURROUND CLOVERLEAF 0.1255 . 0.118 . 0.123 . 391 0.074 51 50 06/08/84
1984 SURROUND CLOVERLEAF 0.1270 . 0.117 . 0.117 . 393 0.074 51 50 06/01/84
1984 TRI-COUNTY TRAUTH 0.1425 9026 0.1325 8987 . . 32 0.0741 4 2 07/17/84
Conclusion
From the sample figures extracted from the bids awarded in the surround and tri county market, it is evident that some companies dominate the winning list of bidders, these companies or firms include cloverleaf, Meyer, and Trauth firms. Factors, which might have attributed to such patterns from the data provided, include bid price, market competition rate, and the dates for forwarding the bids. These firms have relatively low bid price as compared to the rest with low wins in the bids.
