Derived Demand for Refrigerated Truck Transport: A Gravity Model Analysis of Canadian Pork Exports to the United States |
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| Authors: | Barry E Prentice Zhaokun Wang Hector J Urbina |
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| Institution: | Director, Transport Institute, and Associate professor, Department of Agricultural Economics and Farm Management, University of Manitoba, Winnipeg.;Research associate, Transport Institute, University of Manitoba, Winnipeg.;Former graduate student, Department of Agricultural Economics and Farm Management, University of Manitoba, Winnipeg. |
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| Abstract: | Gravity models have a long history in the empirical analysis of trade flows and market penetration, but lack a strong economic foundation. This paper demonstrates that the gravity model can be reconciled with existing economic theory within the framework of an interregional trade model. An empirical gravity model of interregional trade is specified for Canadian pork exports to the United States. The estimated results show that, among other things, demand for transport is highly elastic, suggesting that pork producers and truckers have a mutual interest in exploring means to lower freight costs. Finally, the gravity model is used to identify potential markets for each of the five major exporting provinces. The Canadian pork industry has its best opportunity for further penetration in Illinois, Texas, New York and New Jersey. |
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