Fair Trade and Free Entry: Can a Disequilibrium Market Serve as a Development Tool?

@article{Janvry2015FairTA,
  title={Fair Trade and Free Entry: Can a Disequilibrium Market Serve as a Development Tool?},
  author={Alain de Janvry and C. McIntosh and Elisabeth Sadoulet},
  journal={Review of Economics and Statistics},
  year={2015},
  volume={97},
  pages={567-573}
}
  • Alain de Janvry, C. McIntosh, Elisabeth Sadoulet
  • Published 2015
  • Economics
  • Review of Economics and Statistics
  • The Fair Trade (FT) coffee initiative attempts to channel charity from consumers to poor producers via increased prices. We show that the rules of the FT system permit this rent to be eliminated due to free entry and costly excess certification of output. Using data from an association of coffee cooperatives in Central America, we verify that expected producer benefits are close to 0 when we take into account the output that is certified but not sold as FT. Our results illustrate how free entry… CONTINUE READING
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