Should we refrain from consuming the cultural products of those producers who hold morally objectionable views, when our consumption of such products will benefit said producers?
I think of this as a Ramsey tax problem: we are willing to sacrifice a certain amount of goods and services to do the world some good, how can we do so at minimum damage to our utility?
Just as lump sum taxation is efficient, so should we give away money, rather than distort the MB=MC ratios on our consumption decisions. So my inclination is to avoid boycotts. It is better to just send money to the people or groups you wish to help.
Sometimes boycotts are motivated by the wish to hurt other people — the target of the boycott – rather than by desires to help some oppressed group. Or punishing a group’s critics may be the best way to help that group. Then boycotts make more instrumental sense, especially if the target of your hate has a declining MC curve, as would a movie star or music star with an easily reproducible product. There is less point in boycotting someone in a relatively competitive industry, who is earning little on selling extra units of the product.
Note that if you are facing a monopolist with a durable good, boycotts can make that monopolist better off by helping him to restrict quantity. In other words, boycott rock stars, not painters or sculptors.
A boycott also might be preferable to sending money if your action has a snowball effect on the behavior of others, but that will not be the general case. In fact boycotts often give more publicity to the person or cause you are trying to oppose. "You opposing X" is not, in the eyes of the world, always a negative signal about X.
Sorry.
#21 in a series of 50.
Addendum: See also my post on fair trade.
I was struggling with this over the Google censoring Chinese search results. Thanks for the food for thought.
You say: “Note that if you are facing a monopolist with a durable good, boycotts can make that monopolist better off by helping him to restrict quantity.” Could you please explain why a monopolist would need my help to restrict quantity? If he is really a monopolist, can’t he restrict quantity simply by not producing more than some amount? Or am I just wrong to fixate on such a literal interpretation of the word “monopolist”, and should I think of a painter or sculptor more as somebody whose durable good has no close substitutes sold by others?
Isonomist — a durable-goods monopolist has trouble restricting quantity because it is competing with all past and future versions of itself. It can only reduce the quantity of its goods on the market by somehow destroying goods it has already sold. So to keep prices high, it must convince consumers that the it will not in the future produce a lot of the goods in question — otherwise, the rational consumer will simply delay purchases in expectation that the monopolist will eventually get greedy and the price will come down.
A boycott, by reducing possible future demand, signals current potential customers that the monopolist will not be able to reap a windfall by dropping prices and selling more units in the future. Thus, there is no use to the consumer in waiting for this eventuality. The rational non-boycotting consumer, seeing a boycott, will become more willing to shell out for the goods now rather than to wait. The boycott thus benefits the monopolist.
Of course, this is only true of durable goods, and even then only of durable goods whose purchases are seldom particularly urgent.
“A boycott also might be preferable to sending money if your action has a snowball effect on the behavior of others, but that will not be the general case.”
You’re probably right that it’s not the majority case (which of course depends upon how broadly the concept is understood), but it’s the prototypical case, and the case that makes the most sense. A central feature of effective boycotts is creating social stigmas substantial enough to overcome the other advantages of the product. I don’t see the process working very well for “fair trade” coffee (in Davis, California, where you’d most expect it to), but if somebody wore a fur coat to a party they’d sure find out about the process. It’s not individual choices in a hypothetical live-and-let-live society, but social costs (whether accurately or inaccurately assessed) especially when they trump even the people who would otherwise be extreme valuers of the product.
There is also a game theory perspective. A boycott is a way to induce a cooperative behavior in order to
escape a prisoner’s dilemma: nobody has an interest to individually refrain his own consumption in order
to punish the producer (it would make no difference) but if enough people do it (if the boycott is
effective), it can hurt! However, as every cooperative behavior in a prisoner’s dilemma, a boycott is
be difficult to enforce without commitment.
You could vote at http://www.karmabanque.com/
Comments on this entry are closed.