Non-organized boycott: alliance advantage and free riding incentives in uneven wars of attrition

Abstract

We study non-organized boycott activities. We develop a boycott model where multiple consumers on the demand side fight against a misbehaved monopolist on the supply side. The goal of the boycott is to force the firm that lacks corporate social responsibility to change its behavior, for example, abandon polluting production technology towards environmentally friendly actions. We analyze consumers’ and firm’s incentives and equilibrium strategies. Our paper describes the difficulty of winning a non-organized boycott in reality. We find that consumers’ free riding incentives limit the real boycott power even when the benefits to free ride is small. The larger the market the firm serves, the more likely an individual consumer would stop boycotting (who acts as a strict environmentalist), which leaves fewer boycotters remaining in the costly conflict (who act as loyal supporters of the product). On the other hand, we show that the market size does not significantly affect the firm’s strategies. For a big firm, the consumer boycott will surely be effective, that is, lead to non-zero boycotter participation, but hardly successful, that is, not lead to the firm’s cessation of misbehavior.