Who Benefits From Fair Trade?
...conservative commentator Philip Oppenheim...argued recently that in Britain, it's supermarkets that profit most from fair trade sales. They charge a premium for fair trade bananas, for example, while a "minuscule sliver ends up with the people the movement is designed to help"...
Here is more. In case you don't know, fair trade sells a product at a premium price, under the promise that the workers are treated better and paid more. But will that improve living standards? Hmm...this sounds like a problem in tax incidence theory. To make the best possible case for fair trade, I will assume the promise of good treatment is credible.
Let's say the supermarket has some market power and would have liked to price discriminate on coffee sales. Now you can buy either normal coffee or fair trade coffee, and the richer, more conscientious people are willing to pay more for the latter. Some people can be charged lower prices, while others pay higher prices. Fair trade will likely......
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