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(Fairtrade) certification: consequences of being a niche market

Author

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  • Bissinger, Katharina
  • Leufkens, Daniel

Abstract

Product certification such as organic and fairtrade, leads to a price premium for producers in the majority of cases and thus, also encourages them to increase supplied quantities in order to boost revenue, as empirically evidenced by several studies. Theoretically, this might be a plausible business strategy. The market for certified products is, however, a small one, and producers are not able to sell off the entire quantity produced in the certified niche market. Said supply surplus has to be sold off via conventional trading channels, resulting in a head-on competition between certified and uncertified producers. The analysis at hand sheds light on the revenue gains of certified producers via price discrimination on conventional Southern markets, and the consequences for uncertified producers.

Suggested Citation

  • Bissinger, Katharina & Leufkens, Daniel, 2020. "(Fairtrade) certification: consequences of being a niche market," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 59(2), February.
    • Handle: RePEc:ags:agreko:347976
    DOI: 10.22004/ag.econ.347976
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    References listed on IDEAS

    as
    1. Iacob Cătoiu & Diana Maria Vrânceanu & Alina Filip, 2010. "Setting Fair Prices – Fundamental Principle Of Sustainable Marketing," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 12(27), pages 115-128, February.
    2. Loraine Ronchi, 2002. "The Impact of Fair Trade on Producers and Their Organisations: A Case Study with Coocafé in Costa Rica," PRUS Working Papers 11, Poverty Research Unit at Sussex, University of Sussex.
    3. Raluca Dragusanu & Daniele Giovannucci & Nathan Nunn, 2014. "The Economics of Fair Trade," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 217-236, Summer.
    4. Ruerd Ruben & Ricardo Fort & Guillermo Zúñiga-Arias, 2009. "Measuring the impact of fair trade on development," Development in Practice, Taylor & Francis Journals, vol. 19(6), pages 777-788.
    5. Laura Raynolds, 2000. "Re-embedding global agriculture: The international organic and fair trade movements," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 17(3), pages 297-309, September.
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