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Firms’ ethics, consumer boycotts, and signalling

Author

Listed:
  • Glazer, Amihai
  • Kanniainen, Vesa
  • Poutvaara, Panu

Abstract

This paper develops a theory of consumer boycotts. To affect a firm’s ethical behavior, moral consumers refuse to buy from an unethical firm. Consumers who do not care about ethical behavior may join the boycott to (falsely) signal that they do care, increasing the disciplinary power of consumer boycotts. In the firm’s choice between ethical and unethical behavior, the optimality of mixed and pure strategies depends on the cost of producing ethically. In particular, when the cost is (relatively) low, ethical behavior arises from a prisoners’ dilemma as the firm’s optimal strategy.

Suggested Citation

  • Glazer, Amihai & Kanniainen, Vesa & Poutvaara, Panu, 2010. "Firms’ ethics, consumer boycotts, and signalling," Munich Reprints in Economics 20383, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:20383
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    Citations

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    Cited by:

    1. Jan Schmitz & Jan Schrader, 2015. "Corporate Social Responsibility: A Microeconomic Review Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 27-45, February.
    2. Etilé, Fabrice & Teyssier, Sabrina, 2013. "Corporate social responsibility and the economics of consumer social responsibility," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 94(02), pages 221-259, June.
    3. Suzanne C. Makarem & Haeran Jae, 2016. "Consumer Boycott Behavior: An Exploratory Analysis of Twitter Feeds," Journal of Consumer Affairs, Wiley Blackwell, vol. 50(1), pages 193-223, March.
    4. Vesa Kanniainen, 2016. "Making the World a Better Place: Consumers' Group Identity in the Markets with Competition and Two-sided Opportunism," CESifo Working Paper Series 5842, CESifo.
    5. Margaryta Klymak, 2017. "The Trade Impacts of the Naming and Shaming of Forced and Child Labor," Trinity Economics Papers tep1517, Trinity College Dublin, Department of Economics.
    6. Johan Graafland & Hugo Smid, 2015. "Competition and Institutional Drivers of Corporate Social Performance," De Economist, Springer, vol. 163(3), pages 303-322, September.
    7. Navarro Ana Inés & Varvello Juan Cruz & Camusso Jorge & Soler María José & Arraigada Julián, 2024. "Sustainability and economic performance of startups in the AgTech sector: empirical evidence from Argentina," Asociación Argentina de Economía Política: Working Papers 4748, Asociación Argentina de Economía Política.
    8. Leonardo Becchetti & Nazaria Solferino & M. Tessitore, 2015. "How to safeguard world heritage sites? A theoretical model of “cultural responsibility”," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(3), pages 223-248, September.
    9. Hans Pitlik, 2016. "Who Disapproves of TTIP? Multiple Distrust in Companies and Political Institutions," WIFO Working Papers 513, WIFO.
    10. Markus Leibrecht & Hans Pitlik, 2018. "Is Trust in Companies Rooted in Social Trust, or Regulatory Quality, or Both?," WIFO Working Papers 564, WIFO.
    11. Tajika, Tomoya, 2024. "Informed Consumers Undermine Product Protests," MPRA Paper 122143, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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