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The dynamics of Fair Trade as a mixed-form market

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BECCHETTI LEONARDO
HUYBRECHTS BENJAMIN

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Abstract

This article analyzes the Fair Trade sector as a “mixed-form market”, i.e. a market in which different types of players (in this case, nonprofit, co-operative and for-profit organizations) coexist and compete. The purposes of this article are (1) to understand the factors that have led Fair Trade to become a mixed-form market and (2) to propose some trails to understand the market dynamics that result from the interactions between the different types of players. We start by defining briefly Fair Trade, its different dimensions (including the “fair” quality of the products) and its organizational landscape, focusing on the distinction between the pioneer “Alternative Trading Organizations” and the second-mover companies. Then, we recall the theoretical emergence factors for each type of organization (nonprofit, co-operative and for-profit) and apply these emergence factors to the context of Fair Trade. This analysis allows us to capture the specificities of each type of operator with regard to Fair Trade and, thus, to have a better understanding of the competition dynamics in the sector. The latter analysis includes elements on ethical imitation, consumers’ behaviors, effects on welfare and the role of the government, in order to outline some of the major trends in this rapidly evolving sector.

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Paper provided by Tor Vergata University, CEIS in its series Departmental Working Papers with number 250.

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Date of creation: May 2007
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Handle: RePEc:rtv:ceiswp:250

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  1. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2006. "Corporate Social Responsibility in Oligopoly," Working Papers 0707, University of Crete, Department of Economics, revised 15 Jan 2007. [Downloadable!]
  2. Fabrizio Adriani & Leonardo Becchetti, 2004. "Fair Trade: A 'Third Generation' Welfare Mechanism to Make Globalisation Sustainable," CEIS Research Paper 62, Tor Vergata University, CEIS. [Downloadable!]
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  3. Becchetti Leonardo & Rosati Furio Camillo, 2005. "Globalisation and the death of distance in social preferences ad inequity aversion:empirical evidence from a pilot study on fair trade consumers," Departmental Working Papers 209, Tor Vergata University, CEIS. [Downloadable!]
  4. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 12(3), pages 419-445, 09. [Downloadable!] (restricted)
  5. Joel Sobel, 2005. "Interdependent Preferences and Reciprocity," Journal of Economic Literature, American Economic Association, vol. 43(2), pages 392-436, June. [Downloadable!] (restricted)
  6. Mark Hayes, 2006. "On the efficiency of fair trade," Review of Social Economy, Taylor and Francis Journals, vol. 64(4), pages 447-468, December. [Downloadable!] (restricted)
  7. LeClair, Mark S., 2002. "Fighting the Tide: Alternative Trade Organizations in the Era of Global Free Trade," World Development, Elsevier, vol. 30(6), pages 949-958, June. [Downloadable!] (restricted)
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