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To Buy or Not to Buy? An Experimental Study of Consumer Boycotts in Retail Markets

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Author Info
Jean-Robert Tyran ()
Dirk Engelmann ()

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Abstract

We 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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File URL: http://www.vwa.unisg.ch/RePEc/usg/dp2002/dp0213tyran_ganz.pdf
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Publisher Info
Paper 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.

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Length: 35 pages
Date of creation: May 2002
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Handle: RePEc:usg:dp2002:2002-13

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Related research
Keywords: Posted-offer markets; consumer boycotts; collective action;

Other versions of this item:

Find related papers by JEL classification:
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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References listed on IDEAS
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.:
  1. Miller, Kenneth E & Sturdivant, Frederick D, 1977. " Consumer Responses to Socially Questionable Corporate Behavior: An Empirical Test," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 4(1), pages 1-7, June.
  2. Kachelmeier, Steven J. & Limberg, Stephen T. & Schadewald, Michael S., 1991. "Fairness in markets: A laboratory investigation," Journal of Economic Psychology, Elsevier, vol. 12(3), pages 447-464, September. [Downloadable!] (restricted)
  3. Ernst Fehr & Simon Gachter, 2000. "Cooperation and Punishment in Public Goods Experiments," American Economic Review, American Economic Association, vol. 90(4), pages 980-994, September. [Downloadable!] (restricted)
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  4. Sen, Sankar & Gurhan-Canli, Zeynep & Morwitz, Vicki, 2001. " Withholding Consumption: A Social Dilemma Perspective on Consumer Boycotts," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 28(3), pages 399-417, December.
  5. Urs Fischbacher, . "z-Tree - Experimenter’s Manual," IEW - Working Papers iewwp021, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  6. Franciosi, Robert, et al, 1995. "Fairness: Effect on Temporary and Equilibrium Prices in Posted-Offer Markets," Economic Journal, Royal Economic Society, vol. 105(431), pages 938-50, July. [Downloadable!] (restricted)
  7. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September. [Downloadable!] (restricted)
  8. Ted Bergstrom, 2001. "Free Labor for Costly Journals?," Microeconomics 0106002, EconWPA. [Downloadable!]
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  9. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity - Evidence and Economic Applications," CEPR Discussion Papers 2703, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Colin Jennings & Alan Hamlin, 2009. "Expressive Political Behaviour: Foundations, Scope and Implications," Working Papers 09-18, University of Strathclyde Business School, Department of Economics. [Downloadable!]
  2. Rafael Di Tella & Juan Dubra, 2009. "Anger and Regulation," NBER Working Papers 15201, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
    • Di Tella, Rafael & Dubra, Juan, 2008. "Anger and Regulation," MPRA Paper 14442, University Library of Munich, Germany, revised 29 Mar 2009. [Downloadable!]
  3. Larry Chavis & Phillip Leslie, 2009. "Consumer boycotts: The impact of the Iraq war on French wine sales in the U.S," Quantitative Marketing and Economics, Springer, vol. 7(1), pages 37-67, March. [Downloadable!] (restricted)
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