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Title:Firms' ethics, consumer boycotts, and signalling PDF Logo
Authors:Glazer, Amihai
Kanniainen, Vesa
Poutvaara, Panu
Issue Date:2008
Series/Report no.:IZA Discussion Papers 3498
Abstract:This paper develops a theory of consumer boycotts. Some consumers care not only about the products they buy but also about whether the firm behaves ethically. Other consumers do not care about the behavior of the firm but yet may like to give the impression of being ethical consumers. Consequently, to affect a firm's ethical behavior, moral consumers refuse to buy from an unethical firm. Consumers who do not care about ethical behavior may join the boycott to (falsely) signal that they do care. In the firm's choice between ethical and unethical behavior, the optimality of mixed and pure strategies depends on the cost of behaving ethically. In particular, when the cost is (relatively) low, ethical behavior arises from a prisoners' dilemma as the firm's optimal strategy.
Subjects:Firm's ethical code
consumer morality
boycotts
JEL:M14
Persistent Identifier of the first edition:urn:nbn:de:101:1-20080527186
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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