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Relationships and nature of contracts in the distribution structure for responsible trade

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Abstract

Aware of the high importance of consumers' private information concerning their willingness-to-buy fair trade goods and taking into account the superior price they are willing to pay for this kind of goods with respect to conventional ones, we choose to feed the debate relative to the appropriateness of the di¤erent potential retailing channels. We use a common agency game framework to analyze the changes in the price level according various schemes of upstream-downstream organization and relationships. It appears that the private information parameter as well as the nature of the relationship between suppliers on the one hand and the retailer on the other hand are the key variables that determine the price paid by consumers. We examine several competitive setting, that proves that only the presence of benevolent retailers can bring the outcome close to the socially optimal one in a simultaneous game whereas a sequential process cannot be implemented if the mainstream firm is not granted the leader role. We also propose other types of organisation (as a dedicated retailer, corresponding to a merged case) and of cooperative equilibrium, the latter resulting as a new direction to consider in order to reduce the double-margin e¤ect of the expropriating one resulting from the competitive schemes.
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Dates and versions

hal-02937865 , version 1 (14-09-2020)

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  • HAL Id : hal-02937865 , version 1

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Florence Lachet-Touya. Relationships and nature of contracts in the distribution structure for responsible trade. 2019. ⟨hal-02937865⟩
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