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

35 Pages Posted: 18 Dec 2002

See all articles by Jean-Robert Tyran

Jean-Robert Tyran

University of Vienna; University of Copenhagen - Department of Economics; Centre for Economic Policy Research (CEPR)

Dirk Engelmann

University of London - Royal Holloway - Department of Economics

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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 unsuccessful 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

JEL Classification: C9, D74, L19

Suggested Citation

Tyran, Jean-Robert and Engelmann, Dirk, To Buy or Not to Buy? An Experimental Study of Consumer Boycotts in Retail Markets. Available at SSRN: https://ssrn.com/abstract=355282 or http://dx.doi.org/10.2139/ssrn.355282

Jean-Robert Tyran (Contact Author)

University of Vienna ( email )

Oskar-Morgenstern-Platz 1
Vienna, Vienna 1090
Austria

HOME PAGE: http://homepage.univie.ac.at/jean-robert.tyran/

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark
+45 353 23 027 (Phone)

HOME PAGE: http://www.econ.ku.dk/tyran/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Dirk Engelmann

University of London - Royal Holloway - Department of Economics ( email )

Egham, TW20 0EX
United Kingdom

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