The Fair Trade Idea: Towards an Economics of Social Labels |
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Authors: | Torsten Steinrücken Sebastian Jaenichen |
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Institution: | 1.Thuringian Ministry of Economics, Technology and Employment,Erfurt,Germany;2.Department of Public Finance, Institute of Economics,Technical University Ilmenau,Ilmenau,Germany |
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Abstract: | The concept of Fair Trade is applied to the marketing of a variety of goods. In recent years it has met a continually increasing
interest among consumers. Different Fair Trade organizations are trying to accomplish an improvement in working and living
conditions in developing countries by means of Fair Trade certificates and by paying a price markedly above world market standard.
This is meant to lead to the attainment of basic social standards, especially in agricultural production. The article deals
with how Fair Trade works and whether the social aims can be achieved by the application of this trade concept. Our main result
is that even though efficiency of redistribution through the Fair Trade institutions is lower than through traditional relief
organizations, the Fair Trade concept provides an additional incentive to support better living conditions in the Third World.
Moreover, it provides a stimulus for producers to reorganize the production process in a socially more acceptable manner even
when this is not rewarded by the Fair Trade company.
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Keywords: | Fair trade Social labels International trade Sustainability Social justice Extrinsic product quality |
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