Middlemen, Non-Profits, and Poverty
Chau, Nancy H.; Goto, Hideaki; Kanbur, Ravi
In many markets in developing countries, especially in remote areas, middlemen are thought to earn excessive profits. Non-profits come in to counter what is seen as middlemen's market power, and rich country consumers pay a fair-trade premium for products marketed by such non-profits. This paper provides answers to the following five questions. How exactly do middlemen and non-profits divide up the market? How do the price mark up and price pass-through differ between middleman and non-profits? What is the impact of non-profits entry on the wellbeing of the poor? Should the government subsidize the entry of non-profits, or the entry of middlemen? Should wealthy consumers in the North pay a premium for fair trade products, or should they support fair trade non-profits directly?
WP 2009-30 September 2009JEL Classification Codes: F15; I32; L3
Charles H. Dyson School of Applied Economics and Management, Cornell University
Middlemen; Non-profits; Poverty; Market Access