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French Automobiles and the Chinese Boycotts of 2008: Politics Really Does Affect Commerce

  • Hong Canhui

    ()

    (Beijing University)

  • Hu Wei-Min

    ()

    (National Chengchi University)

  • Prieger James E.

    ()

    (Pepperdine University)

  • Zhu Dongming

    ()

    (Shanghai University of Finance and Economics)

We explore the economic impact of boycotts of French automobiles in China during the time of the 2008 Beijing Olympics. Conditions were favorable for a boycott, enabling Chinese consumers to overcome the collective action problems that can prevent boycott success and other voluntary contributions to public goods. We use brand and model level data in a difference-in-difference specification to investigate the boycotts’ effects on sales. A robust pattern of large impacts emerges: sales of French automobile brands fell 25-33 percent or more. Consumers substituted mostly toward Chinese and other Asian cars. The sales of the French models did not experience similar relative sales declines in countries other than China—triple-difference estimates point toward even larger relative loss of market share in China. Our results provide evidence that commerce can be used as an effective political weapon.

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Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 11 (2011)
Issue (Month): 1 (May)
Pages: 1-38

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Handle: RePEc:bpj:bejeap:v:11:y:2011:i:1:n:26
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