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A proposal to correct external effects in the coffee market: a tax on regular coffee and tea to subsidise the fair trade coffee

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  • Galarraga, Ibon
  • Markandya, Anil

Abstract

This paper justifies the need to introduce a tax on regular coffee drinkers in the UK to subsidise the fair trade/organic coffee production. This policy will allow to take full account of the negative external effect of regular coffee production while internalising the positive effect of fair trade initiatives. Designing such a policy is possible and the benefits of it can be calculated. This paper shows how. Propuesta para corregir las externalidades en el mercado de café: un impuesto sobre el te y el café regular y una subvención sobre el café de Comercio Justo. El presente artículo justifica la necesidad de introducir un impuesto sobre los consumidores de café y té en el Reino Unido para subvencionar la producción de café orgánico y de Comercio Justo. La propuesta permite corregir los efectos externos negativos que se generan en el proceso de producción del café a la vez que sirve para internalizar las externalidades o efectos positivos de los cultivos de café de Comercio Justo. El trabajo muestra que el diseño de esta política es factible y que los beneficios resultantes de ponerla en práctica pueden ser debidamente calculados. Palabras clave: mercado café, mercado justo

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Bibliographic Info

Article provided by Spanish Association of Agricultural Economists in its journal Economia Agraria y Recursos Naturales.

Volume (Year): 06 (2006)
Issue (Month): 12 ()
Pages:

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Handle: RePEc:ags:earnsa:7991

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Related research

Keywords: coffee market; fair trade; International Relations/Trade; Q18; H23;

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References

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  1. Edoardo Marcucci, 1999. "Road Pricing: Old Beliefs, Present Awareness and Future Research Patterns," Working Papers 1999.4, Fondazione Eni Enrico Mattei.
  2. Galarraga, Ibon & Markandya, Anil, 2004. "Economic techniques to estimate the demand for sustainable products: a case study for fair trade and organic coffee in the United Kingdom," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 4(07).
  3. Ibon Galarraga & Anil Markandya, 2003. "The analysis of welfare effects of an environmental product tax: an application to the taxation of car tyres in Hungary," Fiscal Studies, Institute for Fiscal Studies, vol. 24(1), pages 97-114, March.
  4. Diamond, P. A. & McFadden, D. L., 1974. "Some uses of the expenditure function in public finance," Journal of Public Economics, Elsevier, vol. 3(1), pages 3-21, February.
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Cited by:
  1. Galarraga, Ibon & Abadie, Luis M. & Ansuategi, Alberto, 2013. "Efficiency, effectiveness and implementation feasibility of energy efficiency rebates: The “Renove” plan in Spain," Energy Economics, Elsevier, vol. 40(S1), pages S98-S107.

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