Transactional Innovation and the De-Commoditization of the Brazilian Coffee Trade

34 Pages Posted: 15 Mar 2011

See all articles by Pierpaolo Andriani

Pierpaolo Andriani

Durham University - Business School

Carsten Herrmann-Pillath

Max Weber Center for Advanced Cultural and Social Studies

Date Written: March 12, 2011

Abstract

Recent research into international trade has highlighted the role of trade costs in determining the geography of trade. We propose that the notion of comparative advantage has to be expanded to include different capacities to transact and the pertinent factor endowments (organizational and social capital). In a ‘transactional regime’, sets of transaction-enabling tasks (TETs) are arranged to overcome a given pattern of trade resistances. We argue that transactional regimes impact the flows and contents of information that guide the decision making of producers and therefore also shape the resulting international division of labour. Transactional regimes can be classified according to a three-dimensional state space of trade resistances covering certain most generic aspects of information. We apply this approach to analyze the case of the Brazilian coffee business that has evolved into a bifurcated ‘commoditized’ and ‘de-commoditized’ regime in the past twenty years, triggered by the entrepreneurial action of a single company, illycaffè. An entirely new business model has resulted into a shift of the transactional regime in coffee trade, with implications for the distribution of the gains from trade.

Keywords: trade costs, trade in tasks, transactional regime, entrepreneurship in international trade, coffee, illycaffè

JEL Classification: F14, F19

Suggested Citation

Andriani, Pierpaolo and Herrmann-Pillath, Carsten, Transactional Innovation and the De-Commoditization of the Brazilian Coffee Trade (March 12, 2011). Available at SSRN: https://ssrn.com/abstract=1784192 or http://dx.doi.org/10.2139/ssrn.1784192

Pierpaolo Andriani

Durham University - Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

Carsten Herrmann-Pillath (Contact Author)

Max Weber Center for Advanced Cultural and Social Studies ( email )

Nordhäuserstr. 74
Erfurt, 90228
Germany

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