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Exit, Tweets, and Loyalty

Joshua Gans (), Avi Goldfarb () and Mara Lederman ()
Additional contact information
Mara Lederman: University of Toronto

No 2017-009, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: Hirshman's Exit, Voice, and Loyalty highlights the role of "voice" in disciplining firms for low quality. We develop a formal model of voice as a relational contact between firms and consumers and show that voice is more likely to emerge in concentrated markets. We test this model using data on tweets to major U.S. airlines. We find that tweet volume increases when quality - measured by on-time performance - deteriorates, especially when the airline operates a large shared\ of the flights in a market. We also find that airlines are more likely to respond to tweets from consumers in such markets.

Keywords: exit voice and loyalty; complaints; airlines; Twitter; social media (search for similar items in EconPapers)
JEL-codes: L10 D40 L86 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com
Date: 2017-02
Note: MIP
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http://humcap.uchicago.edu/RePEc/hka/wpaper/Gans_G ... t-tweets-loyalty.pdf First version, 2017 (application/pdf)

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