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Middlemen, Non-Profits and Poverty

  • Chau, Nancy H
  • Goto, Hideaki
  • Kanbur, Ravi

In many markets in developing countries, especially in remote areas, middlemen are thought to earn excessive profits. Non-profits come in to counter what is seen as middlemen's market power, and rich country consumers pay a 'fair-trade' premium for products marketed by such non-profits. This paper provides answers to the following five questions. How exactly do middlemen and non-profits divide up the market? How do the price mark up and price pass-through differ between middleman and non-profits? What is the impact of non-profits entry on the wellbeing of the poor? Should the government subsidize the entry of non-profits, or the entry of middlemen? Should wealthy consumers in the North pay a premium for fair trade products, or should they support fair trade non-profits directly?

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7459.

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Date of creation: Sep 2009
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Handle: RePEc:cpr:ceprdp:7459
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