Abstract
In December 2014, the U.S. and Mexico agreed to a suspension agreement that set a $22.25/cwt import price floor on U.S. sugar imports from Mexico. A partial equilibrium trade model was developed to estimate the economic impact the agreement would have had if it had been in effect from 2008 to 2014. In years when the price floor would have been binding, on average, U.S. producers would have gained $138 million and Mexican producers would have lost $218 million. However, total Mexican welfare would have actually increased by $11.5 million. Furthermore, the average price floor that would have maximized total Mexican welfare over that period is $22.76/cwt. Also, under certain supply and demand elasticity conditions, the average price floor that would have maximized joint U.S. and Mexican producer welfare over that period is $21.91/cwt. The latter two estimates are both close to the actual price floor agreed to in the 2014 Suspension Agreement.
Original language | English (US) |
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Pages (from-to) | 55-69 |
Number of pages | 15 |
Journal | Agricultural Economics (United Kingdom) |
Volume | 49 |
Issue number | 1 |
DOIs | |
State | Published - Jan 2018 |
Keywords
- C54
- D60
- F14
- Mexico
- Price floor
- Price undertaking
- Q17
- Q18
- Sugar
- Suspension agreement
- Tariff-rate quota
ASJC Scopus subject areas
- Agronomy and Crop Science
- Economics and Econometrics