Informed Consumers Undermine Product Protests

Tomoya Tajika

MPRA Paper from University Library of Munich, Germany

Abstract: We model a protest against a firm aiming to remove a product that causes negative externalities. Both the firm and consumers are uncertain about the product’s value, but consumers receive noisy signals. Price plays a key role in aggregating information. When prices are high, consumers with both good and bad signals derive almost the same utility from the product being sold, making protests uninformative. By endogenizing the price, we show that as consumer signals improve, protests become less informative, reducing social welfare. This suggests that consumer ignorance may play a role in protest success.

Keywords: Protest; boycotts; information aggregation; ethical voters; monopoly pricing (search for similar items in EconPapers)
JEL-codes: D42 D72 D81 D82 (search for similar items in EconPapers)
Date: 2024-09-19
New Economics Papers: this item is included in nep-ind, nep-mic and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:122143

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