An Economic Analysis of the Effects of Fair-Trade with Rumination on the Popularity of Economists

Journal of Public Finance and Public Choice (2012)

Posted: 12 Nov 2014

See all articles by J. R. Clark

J. R. Clark

The University of Tennessee at Chattanooga

Dwight R. Lee

Southern Methodist University (SMU) - O’Neil Center for Global Markets and Freedom

Date Written: 2012

Abstract

We analyze the effects of fair-trade programs, which allow people to pay extra for products expecting that the premium will improve the lives of poor people in poor countries. We assume these programs are operated exactly as those donating would ideally like them to be. All the money paid in excess of the market price and reasonable administrative costs are transferred to either the workers, or used to improve their communities and working conditions. We demonstrate that these transfers do not help the intended workers, and may harm them and capital owners who hire the workers receive most of the benefit from fair-trade. We end with thoughts on the tendency for many to dismiss economists as aggravating nuisances.

Keywords: fair trade, labor, rent-seeking

JEL Classification: F12, F13, J8

Suggested Citation

Clark, Jeff R. and Lee, Dwight R., An Economic Analysis of the Effects of Fair-Trade with Rumination on the Popularity of Economists (2012). Journal of Public Finance and Public Choice (2012). Available at SSRN: https://ssrn.com/abstract=2522498

Jeff R. Clark (Contact Author)

The University of Tennessee at Chattanooga ( email )

Department of Economics
Suite 313 Fletcher Hall
Chattanooga, TN 37403-2598
United States

Dwight R. Lee

Southern Methodist University (SMU) - O’Neil Center for Global Markets and Freedom ( email )

United States

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