18 N. H. Agri. Experiment Station [Station Bull. 307 



ganization of routes would offer opportunities for more efficient use of 

 manpower, indicating present inefficiencies in this respect. 



Leaving for a future study the consideration of readjustments of 

 routes, of equipment and of labor; and taking as given the present or- 

 ganization of routes, equipment and labor, are charges based upon 

 services rendered and. ii uoi. upon wiiai leases are they set? The fol- 

 lowing sections attempt to answer this question. 



Several considerations make it desirable to use as a standard for 

 comparison the system of trucking rates that would become estab- 

 lished under conditions of perfect competition. Under such condi- 

 tions, charges would be such that no gain could be made by producers 

 shifting from one route to another — in other words, charges would be 

 at a minimum. Likewise, routes would be such that no reorganization 

 of them would reduce the total costs involved in hauling the milk 

 from farm to country station or city plant. 



Throughout this study the term perfect competition is used in the 

 economic sense. In that sen^e it requires, among other things, that 

 the numbers of buyers and sellers be large and the commodity uniform. 

 Applied to the hauling of milk this would mean that many producers 

 were free to bargain with many transportation agencies for the com- 

 modit}- "milk transportation." It would require that all transporta- 

 tion agencies offer the same quality of transportation so that it would 

 be immaterial to the producer or the distributor which operator hauled 

 the milk providing the charges made were identical. Quality of trans- 

 portation would be identical, therefore, whoever provided it. though 

 quantity would vary. Truck routes would have to be fluid in the sense 

 that any of several trucks might immediately rearrange its route in 

 order to pick up or drop milk from any producer should the rate 

 charged that producer be out of line with other rates in the market. 

 (AVhile they are ordinarily by no means as fluid as required under con- 

 ditions of perfect competition, truck routes are unlike railways, where 

 roadbeds are fixed and routes are therefore to a large extent fixed. ) 



Under such a system, each truck operator would strive to maximize 

 his net returns from his trucking operations. It would not matter to 

 him whether rates varied or were identical among producers, so long 

 as his net retui-n from his route was maximized. But in order to have 

 perfect competition in the setting of rates, not only must truck opera- 

 tors compete witii one another for whole routes but also, they must 

 compete foi- indiridiKil pruduccrs!' 



" The concept of transportation ag'encies competing for milk from a par- 

 ticular producer should be noted, as the resulting rate structure may differ 

 from that to be expected where transportation agencies compete only for 

 whole roiitvft and not for individual producers. It is from this standpoint 

 of viewing the whole trucking operation as a unit that the tendency to con- 

 clude that the nearby producer should i)ay the same rate as the man whose 

 farm is on the edge »jf the niilkshed, has sprung. According to those hold- 

 ing this view the hauling costs depend to a large extent on the distance from 

 the first farm to the second, from the second to the third, and so on around 

 the route. In this ca.se, the fact that the individual truck driver is con- 

 cerned largely with the total net return for the route and not with the in- 

 dividual charges, may result in rates to individual producers within a route 

 being somewhat arbitrary and not following closely the pattern to be ex- 

 pected under perfectly competitive conditions. 



