Voting with Your Pocketbook - A Stochastic Model of Consumer Boycotts

Mathematical and Computer Modelling 48 (2008) 1497-1509

13 Pages Posted: 6 Feb 2013

Date Written: May 19, 2008

Abstract

This paper presents a model of consumer boycotts where the discrete choices of concerned consumers are represented as stochastic processes. Boycotts are interpreted as a form of voting where consumers are trying to shape the behavior of firms. We solve for the limiting distribution of the process and analyze its properties. We then discuss how the model relates to standard game-theoretic approaches to the same phenomenon and show that our model selects one of the many solutions of the corresponding game-theoretic treatment. The type of solution selected depends on the costs and benefits of boycotts to consumers. Specifically, boycotts will occur if and only if they are efficient for consumers.

Suggested Citation

Diermeier, Daniel and Van Mieghem, Jan Albert, Voting with Your Pocketbook - A Stochastic Model of Consumer Boycotts (May 19, 2008). Mathematical and Computer Modelling 48 (2008) 1497-1509. Available at SSRN: https://ssrn.com/abstract=2212327

Daniel Diermeier

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Jan Albert Van Mieghem (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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