We study a consumer boycott on cottage cheese, organized in Israel on Facebook in the summer of 2011 following a steep price increase since 2006. The boycott led to an immediate decline in prices, which remain low even six years later. We find that (i) demand at the start of the boycott would have been 30% higher but for the boycott, (ii) own- 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 were concerned with public backlash due to high prices.
Bibliographical noteFunding Information:
∗Northwestern University; email@example.com. ∗∗The Hebrew University of Jerusalem and CEPR; Saul.Lach@mail.huji.ac.il. ∗∗∗Tel Aviv University, CEPR, and ZEW; firstname.lastname@example.org. We thank Steve Berry, Tim Feddersen, Andrea Ichino, Robin Lee, Jesse Shapiro, Manuel Trajtenberg, Christine Zulehner, and seminar participants at The Hebrew University, The London School of Economics, the 2014 “The Economics of Information and Communications Technologies” conference in Paris, the 2014 IIOC meetings in Chicago, the JIE-CEPR applied Industrial Organization in Athens, and the 2014 Economics of ICT conference in Mannheim, for useful comments. We also thank Dan Aks and Max Bocharenko for excellent research assistance. Lach gratefully acknowledges financial support from the Israel Science Foundation (Grant no. 858/11) and from the Wolfson Family Charitable Trust.
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