AbstractThis article discusses the value to milk producers and consumers of segmenting the milk market into bovine Somatotropin‐ (bST) produced milk and non‐bST‐produced milk markets, versus losing milk consumption from consumers who will not consume bST‐produced milk. Results indicate that both bST‐using producers and non‐bST‐using producers benefit from a segmented market when compared to losing milk markets. Even if market loss does not occur, segmenting the market benefits producers not able to effectively use bST, and may even benefit bST users if the use of bST significantly shifts the supply curve for milk. Non‐bST‐consuming consumers benefit from the availability of non‐bST milk, and consumers who are indifferent to the use of bST pay about the same price in