Detection of rigged school milk prices cont d Refer to the
Detection of rigged school milk prices (cont’d). Refer to the investigation into collusive bidding in the northern Kentucky school milk market, presented in Exercises. In competitive sealed-bid markets, vendors do not share information about their bids. Consequently, more dispersion or variability among the bids is typically observed than in collusive markets, where vendors communicate about their bids and have a tendency to submit bids in close proximity to one another in an attempt to make the bidding appear competitive. If collusion exists in the tricounty milk market, the variation in winning bid prices in the surrounding (“competitive”) market will be significantly larger than the corresponding variation in the tricounty (“rigged”) market. A MINITAB analysis of the data on whole white milk in the MILK file yielded the printout shown on page 459. Is there evidence that the bid-price variance for the surrounding market exceeds the bid-price variance for the tricounty market?
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