Political Economy and Welfare Implications of the U.S.-Mexican Tomato Agreement

The goals of this thesis are to a) illustrate the effects of the tomato agreement for the United States, Mexico, and Canada, b) examine the political economy elements of this dispute, and c) show the welfare implications of the agreement.;Chapter two provides extensive details of the agreement along with a graphical analysis where each nation is considered a large country and has the ability to affect the regional price.;Chapter three builds upon the "Trade Talk" model of Grossman and Helpman (1995) to develop a theoretical model which treats the minimum price for imported tomatoes from Mexico as a negotiated settlement between the United States and Mexico.;Chapter four conducts a welfare analysis of the 2013 Suspension Agreement in comparison to free trade and calculates the change in producer surplus and consumer surplus. The model allows for substitution among tomato categories in response to price changes.