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On the effects of fair trade on the welfare of the poor
Author(s) -
Baumann Florian,
Oschinski Matthias,
Stähler Nikolai
Publication year - 2012
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.1736
Subject(s) - welfare , incentive , certification , economics , fair trade , public economics , matching (statistics) , agriculture , microeconomics , market economy , international trade , management , ecology , statistics , mathematics , biology
Despite the rising importance of fair trade (FT), a relatively small amount of academic research has been done in this area so far. Advocates of FT claim that it will ultimately improve the living conditions of the poor. Opponents hold that it will worsen their situation. More often than not, public discussion is affected by dogmatic views, prejudices and emotional charges. This paper aims to contribute to an objective discussion of the topic. We present a matching model to analyse the welfare effects of FT in an agricultural market. Our results show that producers obtaining FT certification are better off. All others will lose if incentives for importers to enter the market decline. Copyright © 2010 John Wiley & Sons, Ltd.