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Contagious "Social Market Enterprises": The Role of Fair Traders

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Author Info

  • Leonardo Becchetti

    ()
    ("Tor Vergata" University, Rome)

  • Giuseppina Gianfreda

    ()
    (University of Tuscia, Viterbo)

Abstract

One of the effects of the introduction of fair trade goods is that of triggering socially responsible imitation of profit maximising sellers and distributors, thereby creating a consumer driven market mechanism which promotes equity and inclusion. To proof ourclaim we analyze the effects of a fair trader’s entry in a differentiation model where the profit maximizing incumbent mayreact in prices and social responsibility and its position on the segment of social responsibility needs to be advertised at some cost. We outline complementarity and substitution effects among relevant variables and explore incumbent’s incentives to cheat on his ethical stance.

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Bibliographic Info

Article provided by SIPI Spa in its journal Rivista di Politica Economica.

Volume (Year): 97 (2007)
Issue (Month): 3 (May-June)
Pages: 51-84

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Handle: RePEc:rpo:ripoec:v:97:y:2007:i:3:p:51-84

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