Salman Ahmed Shaikh

Economics gives reverence to the idea of ‘consumer sovereignty’. Economic theory suggests that it is the consumers’ maximum willingness to pay for a good or service that determines the supplier’s decision to whether supply that good or service and in how much quantity. 

Nonetheless, in reality, there are no perfect markets. Mostly, we come across oligopolies and monopolies. Few firms have major market share in almost all product segments. Since they operate at large scale, they have economies of scale, which generally implies that they can produce a good or service at a lower cost than others.

Therefore, boycotts are less effective in following circumstances:

• If consumers do not have substitutes.

• When the boycotting consumers make up a small market segment.

• When the boycotting consumers cannot boycott for long due to no substitutes and when the goods and services are quite essential.

• When the consumers and governments also earn their incomes and taxes through the commercial operations of the companies against which boycott is contemplated.

Boycotts are more effective in following circumstances:

• If consumers have substitutes.

• When the boycotting consumers make up a large market segment.

• When the boycotting consumers can boycott for long and if required, change their lifestyle and preferences.

• When the local subsidiaries manufacturing the product, local suppliers, franchisers and local distributors can quickly develop substitutes or partner with companies providing the substitutes.

• To facilitate the above point, if governments provide support in transition through short term concession in taxes and access to concessionary finance, then there can be more expediency.

On the other hand, celebrity endorsements amplify demand and if the endorsements are revoked, then it affects demand negatively too. Thus, consumer boycotts where celebrity endorsements are revoked can create more impact. It has been seen that stock markets react to such revoke of celebrity endorsements, boycotts, sanctions or even the prospective news of such events. 

Another issue is that whether boycotts are ethical or not. In the context of Israel’s inhuman and indiscrete bombardment which is mostly killing children, women and other civilians, boycotting the economic source of power of this barbarianism is not only ethical, but a moral necessity if one has any semblance of belief in humanity and human rights.

Another moral issue comes that would it not be unfair to the local manufacturers, franchise owners, local suppliers and most importantly, the employees. One thing to keep in perspective is that if a good or service is commonly used, such as milk, water, drinks, tea, biscuits, shampoos, soaps, detergents etc, then people would continue to demand in almost the same quantity. Thus, the production required to satiate the consumer demand would still be same.

Only change will be in the market share of companies doing the production and supply. As long as overall production and total demand would not change, then the number of labor hours required in production process would also remain the same. Thus, overall, at aggregate level, it is quite possible that there is no or negligible impact on production, employment and tax revenues from that product segment. Only the market would shift from one to the other business.

In addition to that, it will become possible to enjoy some distinct benefits. For instance, imports will go down and foreign repatriation of profits will go down. This will stabilize currency and current account. It may also become possible to decrease cost by avoiding franchise fees and profit sharing if local substitutes are used.

Last issue is that should it be mandatory or voluntary. If adopted by anyone, it should be voluntary and conditional to the cause. It should not become a way of discrimination on any other grounds than supporting the cause. If there is improvement in the scenario of the cause, then there is no longer a need for boycott. This voluntary way of protest is much less strong in its effects as compared to sanctions. Indeed, it is much less of a strong response in reply to the genocide, invasion, and barbaric acts committed by the oppressed regime of Israel and supported by some of the hypocritical governments and corporations in the West.