Abstract
The goals of this thesis are to a) develop a graphical and mathematical analysis of the welfare effects of the Suspension Agreement for the United States and Mexico, b) create a game representation the U.S.-Mexican tomato dispute, c) develop a mathematical model depicting a particular Nash equilibrium of the game, and d) derive the sustainability conditions for cooperative trade agreements in politically varying environments.
Chapter two displays the effects on producer and consumer surplus for the United States and Mexico from the Suspension agreement, as well as the statics of these two components.
Chapter three develops an extensive form representation of the game revealing the subgame-perfect Nash equilibria.
Chapter four represents a particular equilibrium of the previous chapter in mathematical form. The effects of exogenous shocks to the model are discussed as well.
Chapter five utilizes the framework provided in the previous two chapters to develop the sustainability conditions of cooperative trade agreements. The conditions are tested with and without third party mediating institutions.