Firms under pressure: International trade and social activism

Claudius Löhnert

No V-87-22, Passauer Diskussionspapiere, Volkswirtschaftliche Reihe from University of Passau, Faculty of Business and Economics

Abstract: Activists denouncing firms for what they consider unethical conduct (e.g., poor treatment of labor or practices that are harmful to the environment) often pressure firms through consumer boycotts. This paper presents a model of international trade with heterogeneous firms and endogenous campaigns conducted by social activists. Being the target of campaigns damages the reputation of a firm, reducing the perceived quality and therefore sales of its variety. Campaigns require funding by consumers who support the activists' mission. The paper analyzes the effect of such demand-reducing campaigns on firms. It identifies a feedback effect of campaigns that increases mark-ups in the presence of social activism, which stems from large firms attracting more campaigns while campaigns also decrease sales. The paper further shows that social activism reduces the elasticity of bilateral trade flows with respect to trade costs.

Keywords: international trade; heterogeneous firms; gravity; consumer boycotts; NGOs; campaigns; social activism (search for similar items in EconPapers)
JEL-codes: F12 F61 L11 L31 O35 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/251767/1/1796890375.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:upadvr:v8722

Access Statistics for this paper

More papers in Passauer Diskussionspapiere, Volkswirtschaftliche Reihe from University of Passau, Faculty of Business and Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().