Saving Dolphins: Boycotts, Trade Sanctions, and Unobservable Technology
Consumers often boycott imported goods because they do not approve the way they are manufactured; e.g., using child labor or causing dolphin deaths. Without independent oversight firms must first resist the temptation to employ such modes of production and still convince consumers that they do not employ them. This paper develops a model in which a foreign monopolist uses the price to signal his technology choice in the presence of such moral hazard and adverse selection problems. We find that boycotts and indiscriminate tariffs are effective in addressing consumer concerns, but mandatory labeling of the products is not.
|Date of creation:||Nov 2004|
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- Dobrin R. Kolev & Thomas J. Prusa, 2002.
"Dumping and Double Crossing: The (In)Effectiveness of Cost-Based Trade Policy under Incomplete Information,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 895-918, August.
- Dobrin R. Kolev & Thomas J. Prusa, 1999. "Dumping and Double Crossing: The (In)Effectiveness of Cost-Based Trade Policy Under Incomplete Information," NBER Working Papers 6986, National Bureau of Economic Research, Inc.
- Thomas J. Prusa & Dobrin Kolev, 1999. "Dumping and Double Crossing: The (In)Effectiveness Of Cost-Based Trade Policy Under Incomplete Information," Departmental Working Papers 199901, Rutgers University, Department of Economics.
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