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Middlemen, fair traders, and poverty

Author

Listed:
  • Nancy H. Chau

    (Cornell University)

  • Hideaki Goto

    (International University of Japan)

  • Ravi Kanbur

    (Cornell University)

Abstract

We propose a spatial model of producer market access where local middlemen reap market power due to match friction, and fair traders enter to present an alternative. The model features location as a key determinant of the impact of fair trader entry on the market share of fair traders, the distribution of consumer willingness to pay between middlemen and producers, and intra- / inter-regional poverty incidence. For governments who wish to minimize the poverty gap, our results support directing resources to subsidize fair trade organizations, and/or to producers with no access to markets, rather than to local middlemen intermediaries.

Suggested Citation

  • Nancy H. Chau & Hideaki Goto & Ravi Kanbur, 2016. "Middlemen, fair traders, and poverty," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(1), pages 81-108, March.
    • Handle: RePEc:spr:joecin:v:14:y:2016:i:1:d:10.1007_s10888-015-9314-2
    DOI: 10.1007/s10888-015-9314-2
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