Informational Benefits of International Environmental Agreements
AbstractThis paper develops a theory of consumer boycotts. Some consumers care not only about the products they buy but also about whether the firm behaves ethically. Other consumers do not care about the behavior of the firm but yet may like to give the impression of being ethical consumers. Consequently, 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. In the firm's choice between ethical and unethical behavior, the optimality of mixed and pure strategies depends on the cost of behaving 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 InfoPaper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 070818.
Length: 16 pages
Date of creation: May 2008
Date of revision:
Firm's ethical code; Consumer morality; Boycotts;
Other versions of this item:
- Amihai Glazer & Stef Proost, 2008. "Informational benefits of international environmental agreements," Center for Economic Studies - Discussion papers ces0814, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- Glazer, Amihai & Proost, Stef, 2008. "Informational benefits of international environmental agreements," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/183997, Katholieke Universiteit Leuven.
- Amihai Glazer & Stef Proost, 2008. "Informational Benefits of International Environmental Agreements," Working Papers 070810, University of California-Irvine, Department of Economics.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-17 (All new papers)
- NEP-ENV-2008-05-17 (Environmental Economics)
- NEP-MIC-2008-05-17 (Microeconomics)
- NEP-MKT-2008-05-17 (Marketing)
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