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When fairtrade contracts for some are profitable for others

Author

Listed:
  • Claire C. Chambolle

    (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique)

  • Sylvaine Poret

    (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique)

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.

Suggested Citation

  • Claire C. Chambolle & Sylvaine Poret, 2013. "When fairtrade contracts for some are profitable for others," Post-Print hal-02642696, HAL.
    • Handle: RePEc:hal:journl:hal-02642696
    DOI: 10.1093/erae/jbs039
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-02642696
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    References listed on IDEAS

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    Cited by:

    1. Sylvaine Poret, 2014. "Corporate-NGO partnerships in CSR activities: why and how?," Working Papers 2014-04, Alimentation et Sciences Sociales.
    2. Boonaert, Eva & Maertens, Miet, 2023. "Voluntary sustainability standards and farmer welfare: The pathways to success?," Food Policy, Elsevier, vol. 121(C).
    3. Pio Baake & Helene Naegele, 2017. "Competition between For-Profit and Industry Labels: The Case of Social Labels in the Coffee Market," Discussion Papers of DIW Berlin 1686, DIW Berlin, German Institute for Economic Research.
    4. Dick Durevall, 2020. "Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market," Economies, MDPI, vol. 8(2), pages 1-17, April.

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