Corporate Social Responsibility and Consumer Choice: Lessons from the Milk Boycott.

This article analyzes the impact of a consumer boycott on Namyang Dairy Products, one of South Korea’s largest dairy producers, following the public exposure of the firm’s unethical management practices involving abuse of small wholesalers in 2013. Using a discrete choice demand model that accounts for price endogeneity and product substitution, the study finds that the boycott significantly and persistently reduced consumer utility for Namyang’s products, leading to an estimated 7.9% decline in sales (about 8.1 million liters) over the 12 months after the boycott began. The firm mitigated losses by aggressively cutting prices, especially for its leading brand GT, which lessened the sales and revenue declines; without such price adjustments, sales would have fallen by over 25%. Meanwhile, competing nonboycotted dairy brands experienced increased sales, capturing roughly three-quarters of Namyang’s lost volume. The findings highlight the importance of ethical corporate culture in preventing reputational damage and suggest that price promotions may be more effective than advertising in countering boycott effects.