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Now you can buy either normal coffee or fair trade coffee, and the richer, more conscientious people are willing to pay more for the latter. Some people can be charged lower prices, while others pay higher prices. Fair trade will likely increase coffee output, relative to a world with no fair trade. Profits will go up. But what happens to input prices? Will wages of Rwandan coffee producers rise?
It depends on the alternative to market segregation. It is possible that if only a single kind of coffee can be sold, the market would opt for the more expensive coffee, involving better treatment of all workers...
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