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Exit, Tweets and Loyalty

Listed author(s):
  • Joshua S. Gans
  • Avi Goldfarb
  • Mara Lederman

Hirschman’s Exit, Voice, and Loyalty highlights the role of “voice” in disciplining firms for low quality. We develop a formal model of voice as a relational contact between firms and consumers and show that voice is more likely to emerge in concentrated markets. We test this model using data on tweets to major U.S. airlines. We find that tweet volume increases when quality – measured by on-time performance – deteriorates, especially when the airline operates a large share of the flights in a market. We also find that airlines are more likely to respond to tweets from consumers in such markets.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 23046.

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Date of creation: Jan 2017
Handle: RePEc:nbr:nberwo:23046
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