We examine the institutional details of the school milk procurement process
, bidding data, statements of daily executives, and supply characteristics
in Ohio during the 1980s. We compare the bidding behavior of a group of fir
ms in Cincinnati to a control group. We find that the behavior of each of t
he firms differs from that of the control group. We argue that the behavior
of these firms is consistent with collusion. The estimated average effect
of collusion on market prices is about 6.5%, or roughly the cost of shippin
g school milk about 50 miles.