Commercial Casualties: Political Boycotts and International Disputes

54 Pages Posted: 10 Jul 2019

See all articles by Panle Jia Barwick

Panle Jia Barwick

Cornell University - Department of Economics

Shanjun Li

Cornell University - School of Applied Economics and Management

Jeremy Wallace

Cornell University - Department of Government

Jessica Chen Weiss

Cornell University - Department of Government

Date Written: April 5, 2019

Abstract

We explore whether international disputes harm commerce by galvanizing consumer boycotts of foreign products. Boycotts increase the social penalty of owning goods associated with a foreign adversary, offsetting individual incentives to free ride or discount the utility of participation. By harming international commerce, boycotts can help reveal information about resolve and avoid more costly forms of conflict. Using administrative data on the universe of new passenger vehicle registration records in China from 2009 to 2015, we demonstrate that consumer boycott that arose amid tensions between China and Japan over a territorial dispute in 2012 had significant and persistent effects on vehicle sales, especially in cities that witnessed anti-Japanese street demonstrations. The market share of Japanese brands dropped substantially during and after the boycott with long-lasting effects. Our analysis provides concrete evidence of the short- and long-term impacts of international tensions on economic activities.

Keywords: Boycott, Commerce, Trade, International Conflict

JEL Classification: F5, L8

Suggested Citation

Barwick, Panle Jia and Li, Shanjun and Wallace, Jeremy and Weiss, Jessica Chen, Commercial Casualties: Political Boycotts and International Disputes (April 5, 2019). Available at SSRN: https://ssrn.com/abstract=3417194 or http://dx.doi.org/10.2139/ssrn.3417194

Panle Jia Barwick (Contact Author)

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States

Shanjun Li

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

Jeremy Wallace

Cornell University - Department of Government ( email )

Ithaca, NY 14853
United States

Jessica Chen Weiss

Cornell University - Department of Government ( email )

Ithaca, NY 14853
United States

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