A Theory of Consumer Boycotts Under Symmetric Information and Imperfect Competition
This article models strategic interactions between non-identical duopolistic firms and a public interest/environmental organisation (EO) that promotes 'green' production practices by threatening consumer boycotts against 'brown' producers. The article describes when boycotts are deterred by prior firm commitments to be 'green' and, also when a boycott arises in equilibrium, despite symmetric information. When a boycott arises, it is either a small persistent boycott against the 'small firm' in the industry, or a large transitory boycott against the 'large firm' in the industry that prompts the target firm to accede to the boycott demands quickly. Copyright 2006 Royal Economic Society.