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Saving Dolphins: Boycotts, Trade Sanctions, and Unobservable Technology

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  • Kaz Miyagiwa

Abstract

Consumers often boycott imported goods because they do not approve the way they are manufactured; e.g., using child labor or causing dolphin deaths. Without independent oversight firms must first resist the temptation to employ such modes of production and still convince consumers that they do not employ them. This paper develops a model in which a foreign monopolist uses the price to signal his technology choice in the presence of such moral hazard and adverse selection problems. We find that boycotts and indiscriminate tariffs are effective in addressing consumer concerns, but mandatory labeling of the products is not.

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Paper provided by Department of Economics, Emory University (Atlanta) in its series Emory Economics with number 0417.

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Date of creation: Nov 2004
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Handle: RePEc:emo:wp2003:0417

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  1. Thomas J. Prusa & Dobrin Kolev, 1999. "Dumping and Double Crossing: The (In)Effectiveness Of Cost-Based Trade Policy Under Incomplete Information," Departmental Working Papers 199901, Rutgers University, Department of Economics.
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Cited by:
  1. Tomomichi Mizuno & Kazuhiro Takauchi & Takeshi Iida, 2011. "Better technology may be sold for a lower fee: The ad valorem tariff and licensing contract," Discussion Papers 1109, Graduate School of Economics, Kobe University.

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