When fairtrade contracts for some are profitable for others

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2013

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info:eu-repo/semantics/altIdentifier/doi/10.1093/erae/jbs039

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Claire Chambolle et al., « When fairtrade contracts for some are profitable for others », HAL SHS (Sciences de l’Homme et de la Société), ID : 10.1093/erae/jbs039


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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.

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