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Abstract

Over the last three decades, U.S. imports of fresh fruits have been constantly increasing at an annual average growth rate of 7% (USITC, 2016). Fresh fruits make up 9% of the total U.S. food imports (UN Database, 2016) with the top seven fruits accounting for 82% of the value of the U.S. fresh fruit imports and Canada and Mexico (NAFTA countries) as the most important trade partners (USITC, 2016). This study analyzes the main U.S. markets and supply sources of the top imported fresh fruits and estimates a Source-Differentiated Almost Ideal Demand System model (SDAIDS) using time-series data, with North American Free Trade Agreement (NAFTA) countries and the rest of the world (ROW) as import sources. Our results suggest that source of origin is an intrinsic quality attribute for most of the fresh fruits analyzed. More specifically, the study found that most uncompensated own-price elasticities are inelastic, most cross-price elasticities are positives indicating that the fruits imported from given sources are net substitutes, and that statistically significant expenditure elasticities are positive implying that the quantity imported of all the fresh fruit analyzed increases as real expenditure for those fruits rises. The results of this study will be useful to policy-makers in regulating the international market of fresh fruits, setting optimal import taxes and price floors, and predicting likely scenarios of imports from Canada and Mexico.

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