The Competitive Effects of Consumer Boycotts

Marco A. Haan

Journal of Institutional and Theoretical Economics (JITE), 2023, vol. 179, issue 2, 251-270

Abstract: I introduce the possibility of consumer boycotts in a Hotelling model. The more a firm complies with consumers' 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' wishes. Yet, the effect of more competition is ambiguous.

Keywords: consumer; boycotts (search for similar items in EconPapers)
JEL-codes: D72 L13 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1628/jite-2023-0024

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