Over land and over sea: Domestic trade frictions in the Philippines

We create two novel datasets - the starting dates of Roll-On Roll-Off Terminal System (RRTS) service by route, and interprovincial land trade - to evaluate the effects of the RRTS on agricultural trade costs within the Philippines as measured by border effects. We find province border effects to be substantial in the Philippines, with a typical province trading 28-53 times more with itself than with other provinces. The RRTS reduced this by a factor of 0.65. This is confirmed by increased trade flows, with RRTS province pairs trading 36%-42% more on average compared to similar unconnected province pairs. However, the border effect reduction is unevenly distributed and tends to be limited to provinces near the biggest demand center.