To Buy or Not to Buy? An Experimental Study of Consumer Boycotts in Retail Markets
AbstractWe experimentally investigate how firms and consumers react to a sudden cost increase in a competitive retail market. We compare two conditions which 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 these frequently trigger consumer boycotts. However, consumer boycotts are un-successful in holding down market prices even if collective action problems are completely eliminated. While consumer boycotts do not increase consumer rent, they reduce firm profits and market efficiency. Consumer boycotts apparently serve to punish firms for seemingly unfair price increases.
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Bibliographic InfoPaper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2002 with number 2002-13.
Length: 35 pages
Date of creation: May 2002
Date of revision:
Posted-offer markets; consumer boycotts; collective action;
Other versions of this item:
- Jean-Robert Tyran & Dirk Engelmann, 2005. "To Buy or Not to Buy? An Experimental Study of Consumer Boycotts in Retail Markets," Economica, London School of Economics and Political Science, vol. 72(285), pages 1-16, 02.
- 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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