Contact
AAWE
Economics Department
New York University
19 W. 4th Street, 6FL
New York, NY 10012, U.S.A.
Tel: (212) 992-8083
Fax: (212) 995-4186
E-Mail: karl.storchmann@nyu.edu
In this paper, we analyze profit margins and markups of Fair Trade (FT) wines sold in the United States. We are particularly interested in whether and to what extent the FT cost impulse in production is passed along to the supply chain. We draw on a limited sample of about 470 South African wines sold in Connecticut and New Jersey in the fall of 2016; about 90 of them are certified FT. For these wines we have free on board export prices, whole- sale prices, and retail prices, which allows us to compute wholesale and retail margins and analyze the FT treatment effect. We run OLS, 2SLS, and propensity score matching models and find evidence of asymmetrical pricing behavior. While wholesalers seem to fully pass- through the FT cost effect, retailers appear to amplify the cost effect. As a result, at the retail level, FT wines yield significantly higher margins than their non-FT counterparts.
AAWE
Economics Department
New York University
19 W. 4th Street, 6FL
New York, NY 10012, U.S.A.
Tel: (212) 992-8083
Fax: (212) 995-4186
E-Mail: karl.storchmann@nyu.edu