Trade diversion from tomato suspension agreements

Kathy Baylis, Jeffrey M. Perloff

Research output: Contribution to journalArticle

Abstract

Trade barriers can cause output to be diverted to other countries and into other products. We study the effect of a voluntary price restraint (VPR) on Mexican tomatoes entering the United States. The diversion caused by the VPR is statistically and economically significant - representing over four-fifths of the direct effects of the trade barrier. When the VPR was binding, Mexico exported more tomatoes to Canada, the United States cut back on exports while Canada increased their exports to the United States. The VPR also diverted fresh tomatoes in Mexico into paste production, which was then exported to the United States.

Original languageEnglish (US)
Pages (from-to)127-151
Number of pages25
JournalCanadian Journal of Economics
Volume43
Issue number1
DOIs
StatePublished - Feb 1 2010

ASJC Scopus subject areas

  • Economics and Econometrics

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