Working Paper: CEPR ID: DP10460
Authors: Igal Hendel; Saul Lach; Yossi Spiegel
Abstract: We study a consumer boycott on cottage cheese that was organized in Israel on Facebook in the summer of 2011 following a steep increase in prices after price controls were lifted in 2006. The boycott led to an immediate decline in prices which remain low until the present day (March 2016). We find that (i) demand at the start of the boycott, at the new low prices, would have been 30% higher but for the boycott, (ii) own price elasticities and especially cross price elasticities increased substantially after the boycott, and (iii) post-boycott prices are substantially below the levels implied by the post-boycott demand elasticities, suggesting that firms lowered prices due to fears of threat of renewed price controls and the boycott spreading to other products.
Keywords: consumer boycott; price elasticities; social media
JEL Codes: D12; L1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| boycott (D74) | reduced demand (R22) |
| boycott (D74) | increased price sensitivity (D49) |
| increased price sensitivity (D49) | change in consumer behavior (D19) |
| boycott (D74) | firms lowering prices (L11) |
| higher social media exposure (Z13) | stronger negative impact on demand (F69) |
| boycott (D74) | consumer activism (D18) |