From Boycott to Buycott: Is Activism from the North Good for the South?

This article develops an original theoretical exploration of the potential effect of northern activism on working conditions and welfare in the South using a Bertrand-type duopoly model with endogenous prices, wages and qualities. We assume that all consumers derive the same utility from one ("northern") good but are heterogeneous with regards to the other ("southern") good. This asymmetry captures in a stylized fashion the consensus among northern consumers on the labor conditions prevailing in the North and their ambivalence concerning labor practices in the South. A greater consumer's social consciousness can be seen as a punishment (boycott) for the southern socially unsound goods or a reward (buycott) for more virtuous practices in the North. We show that an activism through a buycott strategy or a boycott strategy leads to opposite effects on prices, wages and on the scope of quality differenciation, a buycott being better than a boycott for southern wage, southern quality and southern welfare.