To Buy or Not to Buy? An Experimental Study of Consumer Boycotts in Retail Markets

Jean-Robert Tyran and Dirk Engelmann

University of St. Gallen Department of Economics working paper series 2002 from Department of Economics, University of St. Gallen

Abstract: We experimentally investigate how firms and consumers react to a sudden cost increase in a competitive retail market. We compare two conditions which exclusively differ with respect to how difficult it is to organize and enforce boycotts. We find that cost increases translate into sudden price increases, and that these frequently trigger consumer boycotts. However, consumer boycotts are un-successful in holding down market prices even if collective action problems are completely eliminated. While consumer boycotts do not increase consumer rent, they reduce firm profits and market efficiency. Consumer boycotts apparently serve to punish firms for seemingly unfair price increases.

Keywords: Posted-offer markets; consumer boycotts; collective action (search for similar items in EconPapers)
JEL-codes: C9 D74 L19 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2002-05
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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