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Gainers and Losers of Political Instability: Evidence from the Anti-Japanese Demonstration in China

Author

Listed:
  • Zijun Luo

    (Department of Economics and International Business, Sam Houston State University)

  • Yonghong Zhou

    (Department of Economics, Jinan University, P.R. China)

Abstract

This paper quantifies the Chinese consumers’ boycott of Japanese cars that immediately followed the anti-Japanese demonstration in September 2012.We decompose the total boycott effect into cancel effect and transfer effect. We find that the temporary cancellation of orders by potential buyers accounts for more than 90% of the total decline in Japanese car sales. Such results indicate that Japanese car makers lost these customers only for the short-run. European, Korean, American, and Chinese cars became the dominant substitutes for lost Japanese sales; Chinese brands benefited the least. This paper provides evidence of both negative and positive impacts of political conflicts for different market participants and includes analysis of welfare implications.

Suggested Citation

  • Zijun Luo & Yonghong Zhou, 2016. "Gainers and Losers of Political Instability: Evidence from the Anti-Japanese Demonstration in China," Working Papers 1608, Sam Houston State University, Department of Economics and International Business.
  • Handle: RePEc:shs:wpaper:1608
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    References listed on IDEAS

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    1. Bayad Jamal Ali, 2021. "Impact of consumer animosity, boycott participation, boycott motivation, and product judgment on purchase readiness or aversion of Kurdish consumers in Iraq," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 504-523, June.

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    More about this item

    Keywords

    China; Japan; Boycott; Automobile; Political Conflict;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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