A signaling theory of consumer boycotts

Pim Heijnen and Allard van der Made

Journal of Environmental Economics and Management, 2012, vol. 63, issue 3, 404-418

Abstract: We present a theory that explains the prevalence of consumer boycotts. In our model, a firm does not know how concerned consumers are about the firm's misconduct. Because it is only optimal for the firm to alter its behavior if consumers are very concerned, consumers have an incentive to overstate their concern by boycotting the firm. We show that free-riding problems do not preclude such boycotting. In fact, in each equilibrium boycotting occurs with positive probability and the firm always caters to the demands of those who boycott should boycotting ensue.

Keywords: Consumer boycotts; Asymmetric information; Collective action (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069612000149
Full text for ScienceDirect subscribers only

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:eee:jeeman:v:63:y:2012:i:3:p:404-418

DOI: 10.1016/j.jeem.2012.01.004

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().