Discussion paper

DP7459 Middlemen, Non-Profits and Poverty

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?


Kanbur, R, N Chau and H Goto (2009), ‘DP7459 Middlemen, Non-Profits and Poverty‘, CEPR Discussion Paper No. 7459. CEPR Press, Paris & London. https://cepr.org/publications/dp7459