If, on the other hand, each party discounts the other's bluffing too 

 much, thereby underestimating the extent of the other *s willingness to 

 carry out its threats a conflict must result unless, as is likely during 

 the course, of the negotiations, each is able to correct his estimates. 



Since each party would; in general, prefer a peaceful settlement, the 

 actual materialization of a situation where the crop is not planted will 

 result only from faulty negotiations, arising from errors in the estimates 

 of each concerning the other's actual position. Errors in estimates 

 concerning the other's actual position should be lessened as a result of 

 negotiations,, 



Under actual conditions the bargaining by the buyers may be done through 

 a "milk dealers association" or a "canners association". In such cases, 

 one of the dominant firms usually assumes the role of leadership in 

 ■the negotiations with the cooperatives, or they do it through a repre- 

 sentative committee system. Usually the dominant firms show more inter- 

 est and cooperation in the bargaining process by virtue of their superior 

 research facilities, larger financial resources, and their general 

 opposition to "cutthroat competition". On the other hand no cooperative 

 is in the position of a complete monopolist, since its control over its 

 .membership and total production is rather imperfect and its financial 

 resources may be inferior-. 



In some cases it may be exceedingly difficult for the? two parties to com- 

 promise their differences because each is afraid that the oth^r will interpret 

 any concession as a sign of weakness and might insist more firmly than ever 

 on its original price. In such situations a mediator who commands the con- 

 fidence of the two sides may be exceedingly useful in helping them arrive 

 at a compromise. Or, the deadlock may be broken, as it frequently is in 

 bargaining over wages or the price of milk, by referring the dispute to an 

 arbitration committee. Such a committee impartially reviews the facts on 

 each side and decides where the orices should be. Each party is then re- 

 quested to abide by this decision. 



Bargaining and Administrative Pricing 



The third major alternative for determining price under a buyer-dominated 

 situation is that of utilizing a Government agency to help regulate the 

 industry and establish a "fair" price at hearings called for that pur- 

 pose. This practice has not been followed to any great extent in the 

 processed vegetable industry, although during the World War II State 

 Agricultural War Boards were given certain authority to help regulate 

 contract prices for canning crops which would encourage growers to meet 

 production goals as set by the U. S, Department of Agriculture. In 

 order for processors to qualify to sell canned goods to the Government. 



- 13 - 



