We experimentally investigate how firms and consumers react to a sudden cost increase in a competitive retail market. We compare two conditions which exclusively differ with respect to how difficult it is to organize and enforce boycotts. We find that cost increases translate into sudden price...

We investigate experimentally how firms and consumers react to a sudden cost increase in a competitive retail market. We compare two conditions that exclusively differ with respect to how difficult it is to organize and enforce boycotts. We find that cost increases translate into sudden price...