A SPATIAL EQUILIBRIUM MODEL OF THE CORN TRADE IN THE PHILIPPINES

In this study the com trade in the Philippines is examined using a spatial equilibrium framework in an attempt to quantify the effects of simulating an improvement in the flow of corn within the Philippines. In the analysis trade flows between the spatially and temporally separated markets are quantified. In addition, the implications of processing corn in the southern producing region of Mindanao are discussed and the effects on producers and consumers surplus determined. Central to this study is the partial comparison of transporting unprocessed and processed corn and the change this has on the economic welfare of both producers and consumers. Supply and demand functions are derived for two time periods using estimates of elasticities from various secondary sources. It was found that inter-regional and inter-temporal trade between the regions, along with producers and consumers surpluses, would increase if it were possible to process and transport corn. It is concluded that the processing of com in Mindanao is warranted if the proper infrastructure and government policies are in place.