Abstract:
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Do political tensions affect economic relations? In particular, does politics significantlyaffect consumer choices? Firms are often threatened by consumer boycotts thatpretend to modify their business strategies and behavior. Sometimes these are causedby general political conflicts. The main objective of the paper is to study theconsequences of political conflicts between Spain and Catalonia (a region of Spain)and the subsequent boycott calls on sales of Catalan sparkling wine (cava) in theaggregated Spanish market and also in different regions of the country. We use datafrom sales of sparkling wine in supermarkets and similar outlets. To determine withprecision the boycott period we use data on the number of news about the issue thatappeared in the main national Spanish daily newspapers. Although we present somepreliminary evidence that the boycott calls affected the market share of Catalan cava inSpain, the results of our main econometric exercise indicate that, once we control forthe time trends of the different varieties of sparkling wine, the boycott effects cease tobe significant in the aggregate Spanish market. This does not necessarily mean thatthe boycott calls did not have any significant impact, because we actually find that theeffects are very different in each regional market. As a matter of fact, our resultsindicate that the insignificant impact of the boycott calls at the Spanish aggregate levelis a consequence of the combination of a negative impact of the boycott on sales ofCatalan cava in some regions and the opposite effect in the Catalan market. |