Fair Trade

Martin Richardson and Frank Stähler

Chapter 17 in Dimensions of Trade Policy, 2017, pp 359-388 from World Scientific Publishing Co. Pte. Ltd.

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.

Keywords: Trade Policy; Preferential Trading Agreements; Content Protection; Parallel Imports (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2017
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Related works:
Journal Article: Fair Trade (2014)
Working Paper: Fair Trade (2007)
Working Paper: Fair Trade (2007)
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