Abstract
This article analyses the Fair Trade sector as a “mixed-form market,” i.e., a market in which different types of players (in this case, nonprofit, co-operative and for-profit organizations) coexist and compete. The purposes of this article are (1) to understand the factors that have led Fair Trade to become a mixed-form market and (2) to propose some trails to understand the market dynamics that result from the interactions between the different types of players. We start by defining briefly Fair Trade, its different dimensions (including the “fair” quality of the products) and its organizational landscape, focusing on the distinction between the pioneer “Alternative Trading Organizations” and the second-mover companies. Then, we recall the theoretical emergence factors for each type of organization (nonprofit, co-operative and for-profit) and apply these emergence factors to the context of Fair Trade. This analysis allows us to capture the specificities of each type of operator with regard to Fair Trade and, thus, to have a better understanding of the dynamics in the sector. Such dynamics includes competition, but also conflict and partnership. Our analysis includes elements on ethical imitation, consumers’ behaviors, effects on welfare and the role of the government.
Similar content being viewed by others
References
Abzug R., N. J. Webb: (1999) Relationships Between Nonprofit and For-Profit Organizations: A Stakeholder Perspective. Nonprofit and Voluntary Sector Quarterly 28(4), 416–431
Adobor H.: (2006) Inter-Firm Collaboration: Competition and Dynamics. Competitiveness Review 16(2), 122–134
Akerlof G.: (1970) The Market for ‹Lemons’: Quality Uncertainty and the Market Mechanism. Quarterly Journal of Economics 84, 487–500
Anheier H. K.: (2005) Nonprofit Organizations: Theory, Management, Policy. Routledge, London
Austin J. E.: (2000) Strategic Collaboration Between Nonprofits and Businesses. Nonprofit and Voluntary Sector Quarterly 29(1), 69–97
Bagnoli M., S. G. Watts: (2003) Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods. Journal of Economics & Management Strategy 12(3), 419–445
Becchetti, L. and F. Adriani: 2002, Fair Trade: A ‹Third Generation Welfare’ Mechanism to make Globalisation Sustainable (Centre of International Studies on Economic Growth, Rome)
Becchetti, L. and F. C. Rosati: 2007, Globalisation and the Death of Distance in Social Preferences and Inequity Aversion: Empirical Evidence from a Pilot Study on Fair Trade Consumers. The World Economy
Ben-Ner A.: (2002) The Shifting Boundaries of the Mixed Economy and the Future of the Nonprofit Sector. Annals of Public and Cooperative Economics 73(1), 5–40
Ben-Ner A., B. Gui: (2000) The Theory of NonProfit Organizations Revisited. In H. K. Anheier, A. Ben-Ner (Eds.), The Study of the Nonprofit Enterprise: Theories and Approaches. Kluwer Academic/Plenum Publishers, New York, pp. 3–26
Ben-Ner A., T. Van Hoomissen: (1991) Nonprofit Organizations in the Mixed Economy: A Demand and Supply Analysis. Annals of Public and Cooperative Economics 62(4), 519–550
Defourny J.: (2001) From Third Sector to Social Enterprise. In C. Borzaga, J. Defourny (Eds.), The Emergence of Social Enterprise. Routledge, London, pp. 1–28
Defourny J., M. Nyssens: (2006) Defining Social Enterprise. In M. Nyssens (Ed.), Social Enterprise. At the Crossroads of Market, Public Policies and Civil Society. Routledge, London, pp. 3–26
Develtere, P. and I. Pollet: 2005, Co-Operatives and Fair Trade. Berlin
Enjolras B.: (2000) Coordination Failure, Property Rights and Non-Profit Organizations. Annals of Public and Cooperative Economics 71(3), 347–374
Fehr E., K. M. Schmidt: (2002) The Economics of Fairness and Reciprocity. Evidence and Economic Applications. in M. Dewatripont, L. Hansen, S. Turnovsky (Eds.), Advances in Economic Theory. Eight World Congress of the Econometric Society. Cambridge University Press, Cambridge, pp. 208–257
Fehr E., K. M. Schmidt: (1999) A Theory of Fairness, Competition and Cooperation. Quarterly Journal of Economics 114, 817–868
FLO: 2005, Delivering Opportunities. Annual Report 2004–2005. (Fairtrade Labelling Organizations International, Bonn)
Galaskiewicz J., M. S. Colman: (2006) Collaboration between Corporations and Nonprofit Organizations. In W. Powell, R. Steinberg (Eds.), The Nonprofit Sector. A Research Handbook. Yale University Press, New Haven, pp. 180–204
Handy F.: (1997) Coexistence of NonProfit, For-profit and Public Sector Institutions. Annals of Public and Cooperative Economics 68(2), 201–223
Hansmann H.: (1999) Cooperative Firms in Theory and Practice. Finish Journal of Business Economics 4, 387–403
Hansmann H.: (1996) The Ownership of Enterprise. Harvard University Press, Cambridge
Hansmann H.: (1980) The Role of Non-Profit Enterprise. Yale Law Journal 89(5), 835–901
Hayes M.: (2006) On the Efficiency of Fair Trade. Review of Social Economy 64(4), 447–468
Hotelling H.: (1929) Stability in Competition. Economic Journal 39, 41–57
Huybrechts B.: (2007) Fondements et Implications de la Diversité Organisationnelle Au Sein Du Commerce Equitable. Annals of Public and Cooperative Economics 78(2), 195–218
Huybrechts B., S. Mertens, V. Xhauflair: (2006) Les Interactions Entre l’économie Sociale et La Responsabilité Sociale Des Entreprises. Illustration à Travers la Filière Du Commerce Equitable. Revue Internationale de Gestion 31(2), 65–74
James E.: (1987) The Nonprofit Sector in Comparative Perspective. In W. Powell (Ed.), The Nonprofit Sector. A Research Handbook. Yale University Press, New Haven, pp. 397–415
Jensen M. C., W. Meckling: (1976) Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure. Journal of Financial Economics 3, 305–360
Keynes J. M.: (1931) Chapter 5: The Future. In J. M. Keynes (Ed.), Essays in Persuasion. Norton & Company, New York, pp. 358–374
Kingma B. R.: (1997) Public Good Theories of the Non-profit Sector: Weisbrod Revisited. Voluntas 8(2), 135–148
Kohler, P.: 2006, The Economics of Fair Trade: For Whose Benefit? An Investigation into the Limits of Fair Trade as a Development Tool and the Risk of Clean-Washing. HEI Working Paper 06-2007
Krier J.-M.: (2005) Fair Trade in Europe 2005: Facts and Figures on Fair Trade in 25 European Countries. F. T. A. Office, Brussels
LeClair M. S.: (2002) Fighting the Tide: Alternative Trade Organizations in the Era of Global Free Trade. World Development 30(7), 1199–1122
Levi, Y.: 2005, How Nonprofit and Economy Can Co-Exist: A Cooperative Perspective (Cork)
Manasakis, C., E. Mitrokostas and E. Petrakis: 2006, Corporate Social Responsibility in Oligopoly (Working Paper 0707, University of Crete, Department of Economics)
Marmor T. R., M. Schlesinger, R. W. Smithey: (1987) Nonprofit Organizations and Health Care. In W. Powell (Ed.), The Nonprofit Sector: A Research Handbook. Yale University Press, New Haven (pp. 221–239)
Maseland, R. and A. de Vaal: 2002, `How Fair is Fair Trade?', De Economist 150(3), 251–272
Marwell N. P., P. B. McInerney: (2005) The Nonprofit/For-Profit Continuum: Theorizing the Dynamics of Mixed-Form Markets. Nonprofit and Voluntary Sector Quarterly 34(1), 7–28
Mertens S.: (2005) Une Explication Théorique à l’Existence Des Coopératives Agréées et Des Sociétés à Finalité Sociale en Belgique. Non Marchand 2005–2 (16), 13–27
Milgrom P., J. Roberts: (1992) Economics, Organization and Management. Prentice Hall International, Englewood Cliffs
Moore G.: (2004) The Fair Trade Movement: Parameters, Issues and Future Research. Journal of Business Ethics 53(1), 73–86
Nicholls A.: (2006) Social Entrepreneurship. New Models of Sustainable Social Change. Oxford University Press, Oxford
Nicholls A., C. Opal: (2005) Fair Trade. Market-Driven Ethical Consumption. Sage Publications, London
O’Regan K. M., S. M. Oster: (2000) Nonprofit and For-Profit Partnerships: Rationale and Challenges of Cross-Sector Contracting. Nonprofit and Voluntary Sector Quarterly 29(1), 120–140
Poncelet M., J. Defourny, P. De Pelsmacker: (2004) A Fair and Sustainable Trade, between Market and Solidarity: Diagnosis and Prospects. Belgian Science Policy, Brussels
Roozen, N. and F. van der Hoff: 2001, L'aventure du commerce équitable. Une alternative à la mondialisation. (JC Lattès, Paris)
Rose-Ackerman S.: (1987) Altruism, Ideological Entrepreneurs and the Non-profit Firm. Voluntas 8(2), 120–134
Schiff J., B. Weisbrod: (1991) Competition between For-Profit and Nonprofit Organizations in Commercial Markets. Annals of Public and Cooperative Economics 62(4), 619–639
Sobel J.: (2005) Interdependent Preferences and Reciprocity. Journal of Economic Literature 43(2), 392–436
SONECOM: 2006, Enquête d'opinion sur le commerce équitable (Coopération Technique Belge, Bruxelles)
Spear R.: (2000) The Co-operative Advantage. Annals of Public and Cooperative Economics 71(4), 507–523
Steinberg R.: (2006) Economic Theories of Nonprofit Organizations. In W. W. Powell, R. Steinberg (Eds.), The Nonprofit Sector: A Research Handbook. Yale University Press, New Haven, pp. 13–31
Steinberg R.: (1987) Nonprofit Organizations and the Market. In W. Powell (Ed.), The Nonprofit Sector: A Research Handbook. Yale University Press, New Haven, pp. 118–138
Weisbrod B. A.: (1975) Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy. In: E. S. Phelps (Ed.), Altruism, Morality and Economic Theory. Russel Sage Foundation, New York, pp. 171–195
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Becchetti, L., Huybrechts, B. The Dynamics of Fair Trade as a Mixed-form Market. J Bus Ethics 81, 733–750 (2008). https://doi.org/10.1007/s10551-007-9544-8
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-007-9544-8