Temporary boycotts as self-fulfilling disruptions of markets

James Peck

Journal of Economic Theory, 2017, vol. 169, issue C, 1-12

Abstract: This paper demonstrates how equilibrium involving anticipated boycotts and actual boycotts can occur, even though consumers are negligible and only care about the price they pay and the timing of purchase. The model is a two-period durable goods monopoly game with demand uncertainty. First, a “non-boycott” equilibrium is characterized. Under regularity assumptions ruling out multiplicative uncertainty, there are additional equilibria in which the firm sets a low price in period 0, based on the anticipation that consumers will boycott whenever the price exceeds a threshold. Also, the augmented game, with a publicly observed sunspot, has equilibria in which boycotts occur on the equilibrium path with positive probability.

Keywords: Boycott; Sunspot; Monopoly; Demand uncertainty (search for similar items in EconPapers)
JEL-codes: C73 D42 D83 L12 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022053117300066
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:jetheo:v:169:y:2017:i:c:p:1-12

DOI: 10.1016/j.jet.2017.01.005

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().