“Market Power and Inflation: A Short-Run Target Return Model”—Comment

Recent facts involving food products and their effects on consumers' health have amplified risk and uncertainty in their markets. A new practice has emerged as an attempt to deal with such problems, the so-called third-party certification (TPC). In the perspective of consumers, TPC is supposed to give transparency and legitimacy concerning food safety. But TPC has become increasingly subject to encapsulation by big retailers. By combining institutional (Veblenian) and evolutionary (Schumpeterian-Penrosean) theoretical elements related to the behavior and interaction between firms and consumers, we attempt to provide an overview of how such an encapsulation process takes place.     

Great School Milk Conspiracies Revisited: Rejoinder

A re-examination and analysis ofdata in court records covering sealed-biddingpractices, market shares, incumbency rates, andprofit margins of two dairies charged with bid-riggingdisclose that Scott's analysis is flawed in severalimportant respects: reliance on selective bid data,omission of relevant bid data, and errors in reportedbids. Accordingly, Scott's hypothesis (that twodairies may have been engaged in tacit collusioninstead of overt collusion) was found to be basedlargely on conjectures, not hard data, and thus shouldbe rejected.     

The great school milk conspiracies of the 1980s

Various dairy companies' allocation of school milk contracts using signalling, sham bids to honor incumbency and other devices are examined to determine whether bidding was collusive or pure oligopolistic interdependent behavior following noncooperative game theory. The schemes used to allocate contracts were found to be efficient methods for reaching agreements. Since pure interdependent (noncoorperative) behavior requires rivals to corelate signals, coordinate expectations, and resolve timing-uncertainty problems within sealed-bidding constraints, detailed analysis of the economic evidence of bidding practices requires rejection of a Nash equilibrium explanation for the behavior.