Firms' ethics, consumer boycotts, and signalling
AbstractThis paper develops a theory of consumer boycotts. To affect a firm's ethical behavior, moral consumers refuse to buy from an unethical firm. Consumers who do not care about ethical behavior may join the boycott to (falsely) signal that they do care, increasing the disciplinary power of consumer boycotts. In the firm's choice between ethical and unethical behavior, the optimality of mixed and pure strategies depends on the cost of producing ethically. In particular, when the cost is (relatively) low, ethical behavior arises from a prisoners' dilemma as the firm's optimal strategy.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Political Economy.
Volume (Year): 26 (2010)
Issue (Month): 3 (September)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505544
Firm' s ethical code Consumer morality Boycotts;
Other versions of this item:
- Glazer, Amihai & Kanniainen, Vesa & Poutvaara, Panu, 2008. "Firms' Ethics, Consumer Boycotts, and Signalling," IZA Discussion Papers 3498, Institute for the Study of Labor (IZA).
- Amihai Glazer & Vesa Kanniainen & Panu Poutvaara, 2008. "Firms’ Ethics, Consumer Boycotts, and Signalling," CESifo Working Paper Series 2323, CESifo Group Munich.
- M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Social Responsibility
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Klemperer, Paul, 1995. "Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 515-39, October.
- Andrea C. Morales, 2005. "Giving Firms an "E" for Effort: Consumer Responses to High-Effort Firms," Journal of Consumer Research, University of Chicago Press, vol. 31(4), pages 806-812, 03.
- Guth, W., 1993. "A Simple Justification of Quantity Competition and the Cournot-Oligopoly Solution," Discussion Paper 1993-5, Tilburg University, Center for Economic Research.
- Robert Innes, 2006. "A Theory of Consumer Boycotts under Symmetric Information and Imperfect Competition," Economic Journal, Royal Economic Society, vol. 116(511), pages 355-381, 04.
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