Fair Trade

15 Pages Posted: 17 Dec 2014

See all articles by Martin Richardson

Martin Richardson

Australian National University (ANU) - Faculty of Economics & Commerce

Frank Stahler

University of Tuebingen

Multiple version iconThere are 2 versions of this paper

Date Written: December 2014


This paper analyses a setting in which a vertically integrated fair‐trade firm competes against vertically disintegrated, profit-maximising oligopolists. Consumers of the fair‐trade product derive a ‘warm glow’ that depends on the wage paid to fair-trade producers; the firm returns all surplus to its farmers. Trade integration will unambiguously increase the size of the fair‐trade firm, but the relative size compared to oligopolists may shrink. Furthermore, we show that the 'warm glow' effect may support a marginal expansion of the volume of fair trade, but for rather perverse reasons.

Suggested Citation

Richardson, Martin and Stahler, Frank, Fair Trade (December 2014). Economic Record, Vol. 90, Issue 291, pp. 447-461, 2014, Available at SSRN: https://ssrn.com/abstract=2539741 or http://dx.doi.org/10.1111/1475-4932.12136

Martin Richardson (Contact Author)

Australian National University (ANU) - Faculty of Economics & Commerce ( email )

Canberra, Australian Capital Territory 2601

Frank Stahler

University of Tuebingen ( email )

Eberhard Karls Universität
Tübingen, 72074

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