Fair Trade.

• Autores: Martin Richardson, Frank Stähler
• Localización: Economic record, ISSN 0013-0249, Vol. 90, Nº. 291, 2014, págs. 447-461
• Idioma: inglés
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• Resumen

  • This paper 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.