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Fair Trade

In: Dimensions of Trade Policy

Author

Listed:
  • Martin Richardson
  • Frank Stähler

Abstract

This chapter analyses a setting in which a vertically integrated fair-trade firm competes against vertically disintegrated, profit-maximising oligopolists. Consumers of the fair-trade product derive a “warm glow” that depends on the wage paid to fair-trade producers; the firm returns all surplus to its farmers. Trade integration will unambiguously increase the size of the fair-trade firm, but the relative size compared to oligopolists may shrink. Furthermore, we show that the “warm glow” effect may support a marginal expansion of the volume of fair trade, but for rather perverse reasons.

Suggested Citation

  • Martin Richardson & Frank Stähler, 2017. "Fair Trade," World Scientific Book Chapters, in: Dimensions of Trade Policy, chapter 17, pages 359-388, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813207615_0017
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    Other versions of this item:

    • Martin Richardson & Frank Stähler, 2014. "Fair Trade," The Economic Record, The Economic Society of Australia, vol. 90(291), pages 447-461, December.

    References listed on IDEAS

    as
    1. Klaus Conrad, 2005. "Price Competition and Product Differentiation When Consumers Care for the Environment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(1), pages 1-19, May.
    2. Krivonos, Ekaterina, 2004. "The impact of coffee market reforms on producer prices and price transmission," Policy Research Working Paper Series 3358, The World Bank.
    3. Philip Booth & Linda Whetstone, 2007. "Half A Cheer For Fair Trade," Economic Affairs, Wiley Blackwell, vol. 27(2), pages 29-36, June.
    4. Ponte, Stefano, 2002. "The 'Latte Revolution'? Regulation, Markets and Consumption in the Global Coffee Chain," World Development, Elsevier, vol. 30(7), pages 1099-1122, July.
    5. 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.
    6. Udo Kreickemeier & Douglas Nelson, 2017. "Fair Wages, Unemployment, and Technological Change in a Global Economy," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 8, pages 205-235, World Scientific Publishing Co. Pte. Ltd..
    7. Mark Hayes, 2006. "On the efficiency of fair trade," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 447-468.
    8. Eriksson, Clas, 2004. "Can green consumerism replace environmental regulation?--a differentiated-products example," Resource and Energy Economics, Elsevier, vol. 26(3), pages 281-293, September.
    9. Fabrizio Adriani & Leonardo Becchetti, 2004. "Fair Trade: A 'Third Generation' Welfare Mechanism to Make Globalisation Sustainable," CEIS Research Paper 62, Tor Vergata University, CEIS.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Pio Baake & Helene Naegele, 2017. "Competition between For-Profit and Industry Labels: The Case of Social Labels in the Coffee Market," Discussion Papers of DIW Berlin 1686, DIW Berlin, German Institute for Economic Research.
    2. Ruben, Ruerd & Fort, Ricardo, 2012. "The Impact of Fair Trade Certification for Coffee Farmers in Peru," World Development, Elsevier, vol. 40(3), pages 570-582.
    3. Suphanit Piyapromdee & Russell Hillberry & Donald MacLaren, 2014. "‘Fair trade’ coffee and the mitigation of local oligopsony power," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 41(4), pages 537-559.
    4. Ana C. Dammert & Sarah Mohan, 2015. "A Survey Of The Economics Of Fair Trade," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 855-868, December.
    5. Kadow, Alexander, 2011. "The Fair Trade movement: an economic perspective," SIRE Discussion Papers 2011-10, Scottish Institute for Research in Economics (SIRE).
    6. John Ballingall & Niven Winchester, 2010. "Food Miles: Starving the Poor?," The World Economy, Wiley Blackwell, vol. 33(10), pages 1201-1217, October.

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    More about this item

    Keywords

    Trade Policy; Preferential Trading Agreements; Content Protection; Parallel Imports;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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