To Buy or Not to Buy? An Experimental Study of Consumer Boycotts in Retail Markets
AbstractWe investigate experimentally how firms and consumers react to a sudden cost increase in a competitive retail market. We compare two conditions that exclusively differ with respect to how difficult it is to organize and enforce boycotts. We find that cost increases translate into sudden price increases, and that consumer boycotts are frequent in response. However, consumer boycotts are unsuccessful in holding down market prices even if collective action problems are completely eliminated. While consumer boycotts do not increase consumer rent, they reduce market efficiency. Consumer boycotts apparently serve to punish firms for seemingly unfair price increases. Copyright (c) The London School of Economics and Political Science 2005.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 72 (2005)
Issue (Month): 285 (02)
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- Jean-Robert Tyran & Dirk Engelmann, 2002. "To Buy or Not to Buy? An Experimental Study of Consumer Boycotts in Retail Markets," University of St. Gallen Department of Economics working paper series 2002 2002-13, Department of Economics, University of St. Gallen.
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
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