EFFECT OF INTERNATIONAL PRICE ON THE MEXICAN POTATO MARKET, 1990-2000

Abstract

The potato (Solanum tuberosum L.) market was freed in México, in 2004, according to tree in North American Free Trade Agreement. Sude measury justif the measurement of the impact that external factors, such as international price, have on this market. With the aim of determining the effect of international price upon offer, demand and foreign trade balance of potato and assessing the magnitude of the elasticity of own price, crossed price, and price transmission, which are basic in the formulation of the economic policy, a model of simultaneous equations was constructed. In consist of two offer equations, one of demand, four of price transmission, and two identities, the results indicate that potato production and demand respond inelastically to changes in international price, since in the period between 1990 and 2000, elasticities of 0.027 and –0.019 were determined respectively. On the other hand, the elasticity that relates the balance of foreign trade with the international price for potato turned out to be of –1.75, which is sensibly inferior yhe evalue -9.23 to the one reported by other authors. Such value is elastic and indicates a weak influence of international price upon the high potato imports that have been registered in the period that the North American Trade Agreement has been in function.