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Type: Journal article
Title: Fair Trade
Author: Richardson, M.
Stähler, F.
Citation: The Economic Record, 2014; 90(291):447-461
Publisher: Wiley
Issue Date: 2014
ISSN: 0013-0249
Statement of
Martin Richardson, Frank Stähler
Abstract: 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.
Rights: © 2014 Economic Society of Australia
DOI: 10.1111/1475-4932.12136
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