Use the data set and submit your professional report.

lEl [PARTII] The Kentucky Milk Case In The Kentucky Milk CasePart I, you used graphical and numerical descriptive statistics to investigate bid collusion in the Kentucky school milk market. This case expands your previous analyses, incorporating trtterential statistical methodology. The three areas or your focus are described below. (see p. 127 tor the tile layout or the MILK data.) Again, you should prepare a professional document that presents the results of the analyses and any implications regarding col lusionery practices in the tri-county Kentucky milk market. 1. Incumbency rules Recall [rant Part I that mar- ket allocation (where the same dairy controls the same school districts year atter year) is a common form of collusive behavior in bid- rigging conspiracies Market allocation is typi cally gauged by the incumbency rate tor a market in a given school yeardened as the percent- age or school districts that are won by the same nrilk vendor who won the previous year. Past experience wilh milk bids in a competitive mar- kel reveals that a \"normal\" incumbency rate is about .77that is. 70% of the School districts are expected to purchase their milk trom the same vendor who supplied the milk the previous year. In the 13dislrict iii-county Kentucky market, t3 vendor transitions potentially exist each year. Over the 19851988 period (when bid collusion was alleged to have occurred), there were 52 potential vendor transitions Based on the ac lual number of vendor transitions that occurred each year and over the 19851988 period, make an inference regarding bid collusion, 2. Bid price ri'upen'iorl. Recall that in competi- tive, sealedbid markets more dispersion or variability among the bids is observed than in collusive markets (This is due to conspiring vendors sharing iniorrnation about their bids) Consequently, it collusion exists the variation in bid prices in the iri-oounty market should be signicantly smaller than the corresponding variation in the surrounding market. For each milk product, conduct an analysis to compare the bid price variances of the two markets each year. Make the appropriate inferences 3. Average winning bid price. According to col- lusion theorists, the mean winning bid price in the \"rigged" market will exceed the mean winning bid price in the competitive market for each year in which collusion occurs. In addition, the difference between the competi- tive average and the \"rigged" average tends to grow over time when collusionary tactics are employed over several consecutive years. For each milk product, conduct an analysis to compare the winning bid price means at the tri-county and surrounding markets each yeart Make the appropriate interenees . Drun Sec MILK El