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Working Papers

A Stochastic Model of Consumer Boycotts
Download Paper (PDF 453 K / 32 pages)

Daniel Diermeier and Jan A. Van Mieghem
August 2005

Abstract

This paper presents a model of consumer boycotts where the discrete choices of concerned consumers are represented as a stochastic process.

We solve for the limiting distribution of the process and analyze its properties. We then discuss how the model relates to game-theoretic models of collective action and derive an equilibrium selection result. The type of equilibrium selected depends on the parameters of the model including the switching costs by boycott participants. We end by discussing the model's consequences for activist strategies and targeted firms.

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