A proposal to correct external effects in the coffee market: A tax on regular coffee and tea to subsidise the fair trade coffee

Ibon Galarraga, Anil Markandya


This paper justifies the need to introduce a tax on regular coffee drinkers in the UK to subsidise the fair trade/organic coffee production. This policy will allow to take full account of the negative external effect of regular coffee production while internalising the positive effect of fair trade initiatives. Designing such a policy is possible and the benefits of it can be calculated. This paper shows how.


Coffee market; Fair trade

Subject classification

Q18, H23.

Full Text:



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e-ISSN: 2174-7350   ISSN: 1578-0732   https://doi.org/10.4995/earn