@article{adacea62c4004bb9a2995558036a9ec6,
title = "The Competitive Effects of Consumer Boycotts",
abstract = "I introduce the possibility of consumer boycotts in a Hotelling model. The more a firm complies with consumers{\textquoteright} wishes, the higher its marginal cost, but the lower the probability of facing a consumer boycott. I show that the threat of a consumer boycott can increase the expected profits of firms. Firms lose out when they do face a boycott, but gain even more when their competitor does, giving them more market power. The stronger a boycott will be, the more a firm will cater to consumers{\textquoteright} wishes. Yet, the effect of more competition is ambiguous.",
keywords = "consumer boycotts",
author = "Haan, \{Marco A.\}",
note = "Funding Information: Firms are under increasing pressure to behave as responsible corporate citizens. The influence of nongovernmental groups (NGOs) is increasing, and consumers are increasingly concerned about, for instance, the environmental, labor, political, ethical, and even corporate-governance standards that a firm uses. When such standards do not comply with what consumers find desirable, a consumer boycott may ensue, often orchestrated by one or several NGOs. Examples abound. Shell has been a target for many years, initially for its role in South Africa, then for its role in Nigeria. Nike has long been under pressure for its alleged use of sweat-shops in developing countries, where labor standards are reported to be dismal. Innes (2006) reports that between 1988 and 1995, over 200 firms and over a thousand products were subject to organized boycotts in the USA. Consumer boycotts are almost never so destructive as to completely wipe out the sales of a company. Still, * University of Groningen, the Netherlands. The author thanks seminar participants at the University of Groningen, the National University of Singapore, Tilburg University, and the University of Amsterdam, and two anonymous referees for useful comments and discussion. This project has received funding from the European Fund for Regional Development provided by the European Union via SNN under grant no. OPSNN0286. Publisher Copyright: {\textcopyright} 2023 Mohr Siebeck.",
year = "2023",
month = may,
day = "11",
doi = "10.1628/jite-2023-0024",
language = "English",
volume = "179",
pages = "251--270",
journal = "Journal of Institutional and Theoretical Economics",
issn = "0932-4569",
publisher = "Mohr Siebeck",
number = "2",
}