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The North American free trade agreement: International competitiveness for vegetables
Authors:Mary A. Marchant  Mwana N. Mawampanga  Ravichandran Munirathinam
Affiliation:(1) University of Kentucky, USA
Abstract:Summary and conclusion This research contributes to the knowledge base of potential impacts of NAFTA using quadratic programming, which treats consumers and producers in different regions uniquely and specifies the direction and volume of trade between regions, net social payoff, as well as equilibrium prices to producers and consumers. Our results show that net social payoff and the volume traded between producing and consuming regions increases significantly under NAFTA. Mexican producers gain the most since their market share equalled 80 percent and 64 percent for cucumbers and cantaloupes, respectively, in the post-NAFTA scenario. California producers lose the most, e.g., their market share for cucumbers declined from 76 percent in the pre-NAFTA scenario to nearly zero in the post-NAFTA scenario. On the consumption side, the amount of total cantaloupes consumed more than doubled, while the amount of total cucumbers consumed increased slightly (2 percent). Mexico's producer prices for both crops was significantly lower compared to U.S. producer prices. Since net social payoff increased under NAFTA, the overall gains exceeded the overall losses. The authors with to thank Drs. Harry Hall, Michael Reed, and Angelos Pagoulatos (all from the University of Kentucky) for their helpful suggestions.
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