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Welfare Effects Of Agricultural Trading Blocs: The Simulation Of A North American Customs Union

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  • Kennedy, P. Lynn
  • Hughes, Karol W.

Abstract

Agricultural trade liberalization among the three North American Free Trade Agreement (NAFTA) signatories is modeled using a political preference function. The model distinguishes among Canada, Mexico, the United States, and a politically passive rest of the world. Through the use of intracountry compensation, the analysis shows that, from an agricultural perspective, economic integration is in the best interest of the group as a whole, although not in the best interest of individual countries. More specifically, of the agricultural production sectors, Canadian dairy, Mexican corn, and U.S. beef producers suffer the greatest losses from the formation of North American customs union.

Suggested Citation

  • Kennedy, P. Lynn & Hughes, Karol W., 1998. "Welfare Effects Of Agricultural Trading Blocs: The Simulation Of A North American Customs Union," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(1), pages 1-11, July.
    • Handle: RePEc:ags:jlaare:31185
    DOI: 10.22004/ag.econ.31185
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    References listed on IDEAS

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    1. Devadoss, Stephen & Kropf, Jurgen & Wahl, Thomas I., 1995. "Trade Creation And Diversion Effects Of The North American Free Trade Agreement Of U.S. Sugar Imports From Mexico," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(2), pages 1-16, December.
    2. Barichello, Richard R. & Bivings, Leigh & Carter, Colin A. & Josling, Timothy E. & Lindsey, Patricia J. & McCalla, Alex F., 1991. "The Implications Of A North American Free Trade Area For Agriculture," Commissioned Papers 14619, International Agricultural Trade Research Consortium.
    3. Gardiner, Walter H. & Roningen, Vernon O. & Liu, Karen, 1989. "Elasticities In The Trade Liberalization Database," Staff Reports 278197, United States Department of Agriculture, Economic Research Service.
    4. Kennedy, P Lynn & von Witzke, Harald & Roe, Terry L, 1996. "Strategic Agricultural Trade Policy Interdependence and the Exchange Rate: A Game Theoretic Analysis," Public Choice, Springer, vol. 88(1-2), pages 43-56, July.
    5. Devadoss, Stephen & Kropf, Jurgen, 1995. "Trade Creation And Diversion Effects Of The North American Free Trade Agreement Of U.S. Sugar Imports From Mexico," A.E. Research Series 305137, University of Idaho, Department of Agricultural Economics and Rural Sociology.
    6. Normile, Mary Anne & Goodloe, Carol A., 1988. "U.S.-Canadian Agricultural Trade Issues: Implications For The Bilateral Trade Agreement," Staff Reports 278028, United States Department of Agriculture, Economic Research Service.
    7. Grennes, Thomas J. & Estrada, Julio Hernandez & Krissoff, Barry & Matus Gardea, Jaime Arturo & Sharples, Jerry A. & Valdes, Constanza, 1991. "An Analysis Of A United States-Canada-Mexico Free Trade Agreement," Commissioned Papers 14616, International Agricultural Trade Research Consortium.
    8. Robinson, Sherman & Burfisher, Mary E. & Hinojosa-Ojeda, Raul & Thierfelder, Karen E., 1993. "Agricultural policies and migration in a U.S.-Mexico free trade area: A computable general equilibrium analysis," Journal of Policy Modeling, Elsevier, vol. 15(5-6), pages 673-701.
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    Cited by:

    1. Ramón G. Guajardo Quiroga & Pedro A. Villezca Becerra, 2004. "Impacto de la apertura comercial de México y de su integración en bloques comerciales en el mercado mundial del limón," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 19(1), pages 61-92.
    2. Petrolia, Daniel R. & Kennedy, P. Lynn, 2002. "A Partial-Equilibrium Simulation Of Increasing The U.S. Tariff-Rate Sugar Quota For Cuba And Mexico," 2002 Annual meeting, July 28-31, Long Beach, CA 19764, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Ramon Guajardo & Homero Elizondo, 2003. "North American tomato market: a spatial equilibrium perspective," Applied Economics, Taylor & Francis Journals, vol. 35(3), pages 315-322.

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