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A signaling theory of consumer boycotts

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  • Heijnen, Pim
  • van der Made, Allard

Abstract

We present a theory that explains the prevalence of consumer boycotts. In our model, a firm does not know how concerned consumers are about the firm's misconduct. Because it is only optimal for the firm to alter its behavior if consumers are very concerned, consumers have an incentive to overstate their concern by boycotting the firm. We show that free-riding problems do not preclude such boycotting. In fact, in each equilibrium boycotting occurs with positive probability and the firm always caters to the demands of those who boycott should boycotting ensue.

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  • Heijnen, Pim & van der Made, Allard, 2012. "A signaling theory of consumer boycotts," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 404-418.
    • Handle: RePEc:eee:jeeman:v:63:y:2012:i:3:p:404-418
    DOI: 10.1016/j.jeem.2012.01.004
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    Cited by:

    1. Peck, James, 2017. "Temporary boycotts as self-fulfilling disruptions of markets," Journal of Economic Theory, Elsevier, vol. 169(C), pages 1-12.
    2. Omar Al Serhan & Elias Boukrami, 2015. "Mapping studies on consumer boycotting in international marketing," Transnational Marketing Journal, Oxbridge Publishing House, UK, vol. 3(2), pages 130-151, October.
    3. Werner Bönte & Christian Dienes, 2013. "Environmental Innovations and Strategies for the Development of New Production Technologies: Empirical Evidence from Europe," Business Strategy and the Environment, Wiley Blackwell, vol. 22(8), pages 501-516, December.
    4. Burani, Nadia & Mantovani, Andrea, 2020. "Non-linear pricing and conscious consumption," International Journal of Industrial Organization, Elsevier, vol. 68(C).
    5. Bin Liu & Tao Li & Sang-Bing Tsai, 2017. "Low Carbon Strategy Analysis of Competing Supply Chains with Different Power Structures," Sustainability, MDPI, vol. 9(5), pages 1-21, May.
    6. Wirl, Franz & Feichtinger, Gustav & Kort, Peter M., 2013. "Individual firm and market dynamics of CSR activities," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 169-182.
    7. Yi Zheng, 2020. "Non-organized boycott: alliance advantage and free riding incentives in uneven wars of attrition," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(1), pages 123-141, March.

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