Who Gains from Boycotts? A Welfare Analysis of Consumer Activism
- The first version of the paper was a chapter of my PhD Dissertation at Cornell University. I thank Kiel Albrecht, Nancy Chau, Stephen Coate, Ram Dubey, Ani Guardjikova, Ben Ho, Ravi Kanbur, Sarah Soule, and Sidney Tarrow for helpful discussions. I also thank the seminar participants at the 2008 BWPI Advanced Graduate Development Workshop and Sungkyunkwan University. All errors remaining are mine.
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This paper explores the welfare consequences of product boycotts by linking product and labor markets. Consumers' threat of boycott can affect the firm's decision such as production location, size of operation and wage rate. Such conscientious action, however, can actually result in a welfare loss of the workers of concern as well as consumers themselves. The analysis suggests that consumers set their goals by studying the labor market and coordinating with local groups rather than demanding what may seem righteous.