June, 1941] Local Structure of Milk Prices 43 



of their product by offering it at a price slightly below the prevailing 

 market. Nor are buyers able to secure large additional quantities by offer- 

 ing prices slightly above the market. Prices are what has been termed 

 "administered," that is, they are set by governmental agencies, and are 

 usually neither those that would be arrived at under conditions of free 

 competition, nor those which a monopoHst would set in order to obtain 

 maximum revenue. 



The control over class prices paid producers who sell to a market in 

 v»hich a control agency operates is usually complete, though individual 

 handlers (except where there is a market-wide pool) may influence the 

 composite price which they pay producers by varying their purchases 

 and sales of milk. There is not the same control over either the amount of 

 milk or the number of producers which a plant may receive. The indi- 

 vidual handler can, apart from the influence of price, exert a great pres- 

 sure in keeping producers from shipping to his plant, but can do very 

 little in the direction of attracting them. Consequently, restrictions on the 

 entry of a producer into the market become effective only when price 

 and other factors attract producers. When the opposite situation is true, 

 a handler's policy of exclusion is no longer an important influence. 



Other important factors which exert an influence over producers' 

 selection of a market might be grouped under price. These include such 

 items as, promptness of payment, methods of payment, financial respon- 

 sibility of the handler, reliability of weights and tests, and so forth. As 

 was seen in the case of the Berlin market, past experience of financial loss 

 were given considerable weight in selection of a market. 



Still other factors are those having to do with sanitary laws and regu- 

 hnions. In recent years, various markets have set up standards for milk 

 vv hich must be met before a producer is permitted to supply milk to that 

 market. Sometimes the requirements of one market are sufficiently dif- 

 ferent from those of the alternative market to involve trouble and expense 

 in compliance. 



Extremely difficult of evaluation are those important factors which 

 are included under personal likes and dislikes. Where dealings with a 

 buyer are continuous as they are in the case of a milk producer making 

 daily deliveries, the importance of these personal factors is much greater 

 than when sales occur only a few times a year. l>oyalties, reputations for 

 fair dealing, and dislikes often outweigh large price differences in the 

 minds of producers. 



Whatever the region, the decision of producers to sell to this market 

 or that is based upon a great many considerations besides price. The 

 weight given to each factor undoubtedly differs between producers, and 

 tne difficulty of isolating the influence of one particular factor is great. 

 It has been possible, however, to examine separately each of these factors 

 and to determine the direction in which it operates and to some degree 

 its relative importance. By examining a particular area with the object of 

 finding the factors M'hich are present, together with something of their 

 importance, an estimate can be made of the market response of producers 

 to a long continued price differential between alternative markets. Such 



