Marco A. Haan

The Competitive Effects of Consumer Boycotts

Jahrgang 179 () / Heft 2, S. 251-270 (20)
Publiziert 11.05.2023

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I introduce the possibility of consumer boycotts in a Hotelling model. The more a firm complies with consumers' wishes, the higher its marginal cost, but the lower the probability of facing a consumer boycott. I show that the threat of a consumer boycott can increase the expected profits of firms. Firms lose out when they do face a boycott, but gain even more when their competitor does, giving them more market power. The stronger a boycott will be, the more a firm will cater to consumers' wishes. Yet, the effect of more competition is ambiguous.

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consumer boycotts