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

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  • Jean-Robert Tyran
  • Dirk Engelmann

Abstract

We investigate experimentally how firms and consumers react to a sudden cost increase in a competitive retail market. We compare two conditions that 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 consumer boycotts are frequent in response. However, consumer boycotts are unsuccessful in holding down market prices even if collective action problems are completely eliminated. While consumer boycotts do not increase consumer rent, they reduce market efficiency. Consumer boycotts apparently serve to punish firms for seemingly unfair price increases. Copyright (c) The London School of Economics and Political Science 2005.

Suggested Citation

  • 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, February.
  • Handle: RePEc:bla:econom:v:72:y:2005:i:285:p:1-16
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    References listed on IDEAS

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    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 938-950, July.
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    Cited by:

    1. repec:oup:restud:v:84:y:2017:i:4:p:1652-1682. is not listed on IDEAS
    2. Andrew T. Young & Daniel Levy, 2014. "Explicit Evidence of an Implicit Contract," Journal of Law, Economics, and Organization, Oxford University Press, vol. 30(4), pages 804-832.
    3. Kai A. Konrad & Florian Morath & Wieland Müller, 2014. "Taxation and Market Power," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 173-202, February.
    4. Ana I. Balsa & Michael T. French & Tracy L. Regan, 2012. "Relative Deprivation and Risky Behaviors," Documentos de Trabajo/Working Papers 1203, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    5. Rafael Tella & Juan Dubra, 2014. "Anger and Regulation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(3), pages 734-765, July.
    6. Tyler, Tom R., 2006. "Process utility and help seeking: What do people want from experts?," Journal of Economic Psychology, Elsevier, vol. 27(3), pages 360-376, June.
    7. Orland, Andreas & Selten, Reinhard, 2016. "Buyer power in bilateral oligopolies with advance production: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 122(C), pages 31-42.
    8. Silvia Grappi, 2015. "Consumer boycott of companies implementing offshoring strategies," MERCATI E COMPETITIVITÀ, FrancoAngeli Editore, vol. 2015(3), pages 123-138.
    9. Bruno Frey & Matthias Benz & Alois Stutzer, 2004. "Introducing Procedural Utility: Not Only What, but Also How Matters," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(3), pages 377-377, September.
    10. Yuksel, Ulku & Mryteza, Victoria, 2009. "An evaluation of strategic responses to consumer boycotts," Journal of Business Research, Elsevier, vol. 62(2), pages 248-259, February.
    11. Omar Al Serhan & Elias Boukrami, 2015. "Mapping studies on consumer boycotting in international marketing," Transnational Marketing Journal, Transnational Press London, UK, vol. 3(2), pages 130-151, October.
    12. Hoffmann, Stefan & Müller, Stefan, 2009. "Consumer boycotts due to factory relocation," Journal of Business Research, Elsevier, vol. 62(2), pages 239-247, February.
    13. Lisa Bruttel, 2014. "Buyer power in large buyer groups?," TWI Research Paper Series 92, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    14. repec:kap:jbuset:v:145:y:2017:i:3:d:10.1007_s10551-015-2870-3 is not listed on IDEAS
    15. Georgy Egorov & Bård Harstad, 2017. "Private Politics and Public Regulation," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1652-1682.
    16. Hamlin, Alan & Jennings, Colin, 2011. "Expressive Political Behaviour: Foundations, Scope and Implications," British Journal of Political Science, Cambridge University Press, vol. 41(03), pages 645-670, July.
    17. Xiao, Erte & Houser, Daniel, 2009. "Avoiding the sharp tongue: Anticipated written messages promote fair economic exchange," Journal of Economic Psychology, Elsevier, vol. 30(3), pages 393-404, June.
    18. Andrew T. Young & Daniel Levy, 2014. "Explicit Evidence of an Implicit Contract," Journal of Law, Economics, and Organization, Oxford University Press, vol. 30(4), pages 804-832.

    More about this item

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other

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