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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

Suggested Citation

  • Galarraga, Ibon & Markandya, Anil, 2006. "A proposal to correct external effects in the coffee market: a tax on regular coffee and tea to subsidise the fair trade coffee," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 6(12), pages 1-23.
    • Handle: RePEc:ags:earnsa:7991
    DOI: 10.22004/ag.econ.7991
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    References listed on IDEAS

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    1. 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.
    2. Edoardo Marcucci, 1999. "Road Pricing: Old Beliefs, Present Awareness and Future Research Patterns," Working Papers 1999.4, Fondazione Eni Enrico Mattei.
    3. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521311120.
    4. 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), pages 1-26.
    5. Patrick Guillaumont & Catherine Bonjean, 1991. "Effects on agricultural supply of producer price level and stability with and without goods scarcity: The case of coffee supply in Madagascar," Journal of International Development, John Wiley & Sons, Ltd., vol. 3(2), pages 115-133.
    6. 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 98-107.
    2. Galarraga, Ibon & Abadie, Luis M. & Kallbekken, Steffen, 2016. "Designing incentive schemes for promoting energy-efficient appliances: A new methodology and a case study for Spain," Energy Policy, Elsevier, vol. 90(C), pages 24-36.
    3. Ibon Galarraga & Luis M. Abadie, 2014. "The use of “Bonus-Malus†schemes for promoting energy-efficient household appliances: a case study for Spain," Working Papers 2014-06, BC3.

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