The Impact of Partial Mexican Government Sugar Industry Ownership on U.S. and Mexican Sugar Trade

Mexico is the leading exporter of sugar into the United States and the Mexican government owns and operates 20% of its sugar industry. We develop a partial equilibrium model to determine the impact of partial Mexican government ownership of its sugar industry on U.S. and Mexican welfare. If the Mexican government was removed from sugar production, U.S. sugar producers would gain up to $1.6 billion annually and Mexican producers would lose up to $340 million or gain up to $349 million annually, depending on relative supply and demand elasticities.