Methodology and Implications of Spatial Equilibrium Solutions in the Pork Sector of the Livestock-Meat Economy

Abstract

A S THE linear programming literature of the 1940's reflected the growth of the transportation model, so the decade of the 1950's witnessed the development of spatial equilibrium models from theoretical exposition to empirical application. Both models seek to determine optimum shipment patterns for trade of a product among three or more market places within a rather perfectly competitive market area where the amount of the commodity produced is equal to the amount consumed. When the solution is derived with a transportation model, an optimum shipment pattern is reached when all destination requirements have been satisfied and total transportation costs have been minimized. The solution yields the total transportation bill and discloses the direction and volume of trade between each possible pair of regions. When the more penertating spatial equilibrium approach is employed, the equilibrium relationship discloses not only volume, direction and cost of shipment, but also per capita consumption and price per unit in each region. An optimum pattern is attained when all destination requirements have been fulfilled, total transportation cost has been minimized, and product value-added, therefore, has been maximized. This paper constitutes a progress report on current investigations at the Ohio Agricultural Experiment Station into the interregional nature of the hog-pork sector of the livestock-meat economy. Five, 27-region U. S. models for 1960 and five, 29-region models for 1975 attempted to incorporate variations which would yield insights that might otherwise remain unquantified: (1) Liveweight transportation rates were incorporated independently of volume but not of direction of shipment. (2) Implications of slaughter location were examined on the basis of both procurement and distribution patterns provided by optimum shipment solutions for live animals to slaughter together with shipment patterns of meat from slaughter to consumption. (3) Regional boundaries were