Transport Costs Impacts on the Fresh Market for Peaches—with Special Emphasis on the Northeast

Abstract

An interregional transportation model was constructed using ordinary least squares and reactive programming to evaluate the short-run economic impact of changing transportation rate on the U.S. interregional equilibrium and, in particular, the Northeast's competitive position for fresh peaches. Using fixed regional supplies, uniquely determined regional per capita consumption and existing transportation rates the reactive programming algorithm obtains solutions to the spatial equilibrium problem including: overall regional quantities supplied and demanded, prices, consumers’ outlays, producers’ revenues and opportunity, transfer and shipping costs. Transportation rates were varied 20 percent above and below the current rates to examine the short-run economic impact on the prevailing equilibrium. The East Coast was a relatively isolated market and therefore was not significantly affected by changes in transportation rates. The most significant changes in producers’ revenues and trade flow patterns occurred in the remaining regions that traded mostly amongst themselves.