Factor and Product Market Tradability and Equilibrium in Pacific Rim Pork Industries

Abstract

This study uses a new market analysis methodology to examine price and trade relationships in eight Pacific Rim factor and product markets central to the Canadian and U.S. pork industries. The new method enables direct estimation of the frequencies with which a variety of market conditions occur, including competitive equilibrium, tradability, and segmented equilibrium. While extraordinary profit opportunities emerge episodically in a few niche markets, the vast majority of the markets studies are highly competitive- exhibiting zero estimated marginal profits to spatial arbitrage at monthly frequency- and internationally contestable. With a few notable exceptions due primarily to nontariff barriers, and despite significant remaining tariffs in some niches, the Pacific Rim is effectively a single market for pork producers and processors today.

Keywords

• corn
• feed
• hogs
• international trade
• law of one price
• market integration
• soybean meal
• spatial equilibrium