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Transactional innovation and the de-commoditization of the Brazilian coffee trade

Author

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  • Andriani, Pierpaolo
  • Herrmann-Pillath, Carsten

Abstract

Recent research into international trade has highlighted the role of trade costs in determining the geography of trade. We propose that the notion of comparative advantage has to be expanded to include different capacities to transact and the pertinent factor endowments (organizational and social capital). In a 'transactional regime', sets of transaction-enabling tasks (TETs) are arranged to overcome a given pattern of trade resistances. We argue that transactional regimes impact the flows and contents of information that guide the decision making of producers and therefore also shape the resulting international division of labour. Transactional regimes can be classified according to a three-dimensional state space of trade resistances covering certain most generic aspects of information. We apply this approach to analyze the case of the Brazilian coffee business that has evolved into a bifurcated 'commoditized' and 'de-commoditized' regime in the past twenty years, triggered by the entrepreneurial action of a single company, illycaffè. An entirely new business model has resulted into a shift of the transactional regime in coffee trade, with implications for the distribution of the gains from trade.

Suggested Citation

  • Andriani, Pierpaolo & Herrmann-Pillath, Carsten, 2011. "Transactional innovation and the de-commoditization of the Brazilian coffee trade," Frankfurt School - Working Paper Series 162, Frankfurt School of Finance and Management.
  • Handle: RePEc:zbw:fsfmwp:162
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    References listed on IDEAS

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    1. Herrmann-Pillath, Carsten, 2009. "Kulturelle Hybridisierung und Wirtschaftstransformation in China," Frankfurt School - Working Paper Series 115, Frankfurt School of Finance and Management.
    2. Herrmann-Pillath, Carsten, 2008. "Neuroeconomics, naturalism and language," Frankfurt School - Working Paper Series 108, Frankfurt School of Finance and Management.
    3. Herrmann-Pillath, Carsten, 2010. "Entropy, function and evolution: naturalizing Peircian semiosis," Frankfurt School - Working Paper Series 134, Frankfurt School of Finance and Management.
    4. Ansgar Belke & Thorsten Polleit, 2005. "(How) Do Stock Market Returns React to Monetary Policy? - An ARDL Cointegration Analysis for Germany," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 253/2005, Department of Economics, University of Hohenheim, Germany.
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    6. Hirsch, Christian & Bannier, Christina E., 2007. "The economics of rating watchlists: Evidence from rating changes," CFS Working Paper Series 2008/02, Center for Financial Studies (CFS).
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    Cited by:

    1. Fabrizio Cafaggi & Luana F. Joppert Swensson & Ronaldo Porto Macedo Junior & Tiago Andreotti e Silva & Clarissa Piterman Gross & Lucila Gabriel de Almeida & Thiago Alves Ribeiro, 2012. "Accessing the Global Value Chain in a Changing Institutional Environment: Comparing Aeronautics and Coffee," IDB Publications (Working Papers) 4250, Inter-American Development Bank.

    More about this item

    Keywords

    trade costs; trade in tasks; transactional regime; entrepreneurship in international trade; coffee; illycaffè;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F19 - International Economics - - Trade - - - Other

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