Firms' Ethics, Consumer Boycotts, and Signalling

This paper develops a theory of consumer boycotts. Some consumers care not only aboutthe products they buy but also about whether the firm behaves ethically. Other consumersdo not care about the behavior of the firm but yet may like to give the impression of beingethical consumers. Consequently, to affect a firm's ethical behavior, moral consumersrefuse to buy from an unethical firm. Consumers who do not care about ethical behaviormay join the boycott to (falsely) signal that they do care.[...]