1. The economics of Fair Trade: dealing with some criticisms Mark Hayes Senior Research Fellow in Economics Homerton College, Cambridge

2. The arguments of the critics second-best alternative to aid

3. B3B3 B1B1 B2B2 Y L* I1I1 I2I2 L1L1 L2L2

4. The arguments of the critics second-best alternative to aid imposes losses on non-Fair Trade producers

5. P Q Elastic demand p0p0 p1p1

6. Key analytical ideas so far Direct impact: underemployment Indirect impact: elasticity of demand

7. The arguments of the critics second-best alternative to aid imposes losses on non-Fair Trade producers prolongs unsustainable dependence

8. Key analytical ideas so far Direct impact: underemployment Indirect impact: elasticity of demand Dependence: the nature of the household investment decision Hayes, M. G. (2006). On the efficiency of Fair Trade. Review of Social Economy, 44(4), 447–68. Hayes, M. G. (2008). A comment on the economics of Fair Trade. World Development, 36 (12), 2953-2961

9. The arguments of the critics second-best alternative to aid imposes losses on non-Fair Trade producers prolongs unsustainable dependence can never be more than a niche

11. Four key analytical ideas to counter the four criticisms Direct impact: underemployment Indirect impact: elasticity of demand Dependence: the nature of the household investment decision Scale up: Fair Trade embodies principles similar to those needed to reform the international monetary and trading system.