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When fairtrade contracts for some are profitable for others

Claire Chambolle () and Sylvaine Poret ()

European Review of Agricultural Economics, 2013, vol. 40, issue 5, 835-871

Abstract: We analyse a vertical chain with perfectly competitive farmers who offer raw products on a spot market to manufacturers who resell the finished goods to a distributor. Absent Fairtrade, the entire raw product is sold on the spot market. A Fairtrade organisation can offer to part of farmers a contract consisting of a guaranteed minimum price and a direct relationship with a distributor. A snowball effect arises when farmers who are not involved in Fairtrade benefit from a higher spot price. This article highlights several mechanisms, either linked to the demand or the market structure, that may explain this snowball effect. , Oxford University Press.

Date: 2013
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Handle: RePEc:oup:erevae:v:40:y:2013:i:5:p:835-871