Firms under pressure: International trade and social activism

Arbeitspapier

Activists denouncing firms for what they consider unethical conduct (e.g., poor treatment of labor or practices that are harmful to the environment) often pressure firms through consumer boycotts. This paper presents a model of international trade with heterogeneous firms and endogenous campaigns conducted by social activists. Being the target of campaigns damages the reputation of a firm, reducing the perceived quality and therefore sales of its variety. Campaigns require funding by consumers who support the activists' mission. The paper analyzes the effect of such demand-reducing campaigns on firms. It identifies a feedback effect of campaigns that increases mark-ups in the presence of social activism, which stems from large firms attracting more campaigns while campaigns also decrease sales. The paper further shows that social activism reduces the elasticity of bilateral trade flows with respect to trade costs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Passauer Diskussionspapiere - Volkswirtschaftliche Reihe ; No. V-87-22

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Economic Impacts of Globalization: Microeconomic Impacts ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Nonprofit Institutions; NGOs; Social Entrepreneurship ; Social Innovation
• Subject: international trade ; heterogeneous firms ; gravity ; consumer boycotts ; NGOs ; campaigns ; social activism

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Löhnert, Claudius
• Event: Veröffentlichung
• (who): Universität Passau, Wirtschaftswissenschaftliche Fakultät
• (where): Passau
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/251767
• Last update: 10.03.2025, 11:42 AM CET