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Exit, Tweets, and Loyalty†

Exit, Tweets, and Loyalty† AbstractHirschman’s Exit, Voice, and Loyalty highlights the role of “voice” when individuals confront an unexpected deterioration in quality. Yet, voice has received little attention. To motivate our empirical analysis, we develop a simple model of voice as the equilibrium of a relational contract between customers and firms. We use data on 4 million tweets to or about US airlines to study the relationship between quality, voice, and market structure. Voice increases when quality deteriorates. This relationship is greater for airlines that operate a large share of flights in a market. Supplemental analyses support a relational contracting role for voice. (JEL D83, L15, L82, L93) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

Exit, Tweets, and Loyalty†

Exit, Tweets, and Loyalty†

American Economic Journal: Microeconomics , Volume 13 (2) – May 1, 2021

Abstract

AbstractHirschman’s Exit, Voice, and Loyalty highlights the role of “voice” when individuals confront an unexpected deterioration in quality. Yet, voice has received little attention. To motivate our empirical analysis, we develop a simple model of voice as the equilibrium of a relational contract between customers and firms. We use data on 4 million tweets to or about US airlines to study the relationship between quality, voice, and market structure. Voice increases when quality deteriorates. This relationship is greater for airlines that operate a large share of flights in a market. Supplemental analyses support a relational contracting role for voice. (JEL D83, L15, L82, L93)

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Publisher
American Economic Association
Copyright
Copyright © 2021 © American Economic Association
ISSN
1945-7685
DOI
10.1257/mic.20180085
Publisher site
See Article on Publisher Site

Abstract

AbstractHirschman’s Exit, Voice, and Loyalty highlights the role of “voice” when individuals confront an unexpected deterioration in quality. Yet, voice has received little attention. To motivate our empirical analysis, we develop a simple model of voice as the equilibrium of a relational contract between customers and firms. We use data on 4 million tweets to or about US airlines to study the relationship between quality, voice, and market structure. Voice increases when quality deteriorates. This relationship is greater for airlines that operate a large share of flights in a market. Supplemental analyses support a relational contracting role for voice. (JEL D83, L15, L82, L93)

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: May 1, 2021

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