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Economic Analyses of Collusive Bidding Behavior - Case Study Example

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The following paper casts light upon the fact that as a common practice, the local school district officials are inviting bidders to supply milk and other dairy products each year. In line with this, suppliers are required to submit their bids in exchange for a potential business contract…
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Economic Analyses of Collusive Bidding Behavior
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Download file to see previous pages In the United States, some legislation has been made to minimize the incidence of collusion behind the supply of school milk. In line with this, anyone who will be caught guilty of entering into collusion to control the auction price of milk will be required to pay fine sent to jail for a period of six months, or both (Porter & Zona, 1997). Despite the government’s effort to control the incidence of collusion in school milk auctions in the U.S., the culture behind collusion in school milk auctions has been going on for a long period of time.
The economic issues behind the procurement process and the nature of auction for school milk will be provided to give the readers a better understanding of the case study. In response to the case study, some of the key economic issues that could explain the development of collusion in school milk auction will be identified and tackled in details. In line with this, the impact of economic factors like prices, consumer welfare, actual and potential competitors on market competition will be examined to enable us to determine whether or not economic reasons could stimulate the high incidence of collusion in school milk auction will be answered. As part of going through the explanation, the theory of supply and demand will be used to explain what really happens in the market of school milk.
The main purpose of the study is to encourage the student to develop his/her expertise in analyzing the economic factors that could trigger the high incidence of collusion in school milk auction in Ohio.
The market of school milk supply in the United States is purely affected by the demand, production process, and competition among the suppliers within a geographic area (Porter & Zona, 1997). Although the market of school milk supply is dictated by supply and demand curve, the fact that each school conducts a yearly auction does not necessarily mean that a higher the demand for milk supply would invite more potential milk suppliers to join the market competition. Likewise, the lesser the demand for milk supply does not necessarily mean a lesser number of milk supplier. ...Download file to see next pagesRead More
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