Chapter 2 constitutes the core theoretical chapter of the book. It serves two functions. First, it introduces the micro–institutional rational choice approach that is applied throughout the work. It explains why producers targeted by market-driven regulatory governance can be considered boundedly rational actors, what this characterization entails, and how institutional arrangements can help such actors to overcome collective action problems. It then shows how Kiser and Ostrom’s Three Worlds of Action can be leveraged to link institutional design choices to their outcomes. In a second step, Chapter 2 examines market-driven regulatory governance using this approach. It uncovers the institutional design dilemma that standards face as they scale up, and specifies a number of hypotheses on how these choices (e.g., between binding and flexible standard–setting; strict or flexible oversight mechanisms; and a focus on price premiums or on capacity building) will affect the implementation of standards by drawing on institutional rational choice theory as well as insights from the socio-legal literature.

This final chapter summarizes the insights gained and discusses how far they travel beyond the coffee sector. It first concludes that market-driven schemes only show partial effectiveness – and even then only when allowing the goal posts of a ‘sustainable coffee sector’ to be moved a considerable distance from its original definition. In a second step, it discusses the generalizability of the book’s results. It reiterates that the coffee sector – with a relatively easy-to-trace value chain, a consumer-facing product, and a long history of awareness raising in both industry and civil society – exhibits many features that should benefit the proper operation of market-driven regulatory governance. The fact that it did not appear to succeed in this best-case scenario raises serious questions about the ability of private governance to show better results in other supply chains. It closes by putting the book into conversation with recent work and suggesting implications for academics, practitioners, governments, and consumers.