Joshua S. Gans, Avi Goldfarb, Mara Lederman

Hirshman's Exit, Voice, and Loyalty highlights the role of "voice" in disciplining firms for low quality. We develop a formal model of voice as a relational contact between firms and consumers and show that voice is more likely to emerge in concentrated markets. We test this model using data on tweets to major U.S. airlines. We find that tweet volume increases when quality - measured by on-time performance - deteriorates, especially when the airline operates a large shared\ of the flights in a market. We also find that airlines are more likely to respond to tweets from consumers in such markets.

JEL Codes
L10: Market Structure, Firm Strategy, and Market Performance: General
D40: Market Structure and Pricing: General
L86: Information and Internet Services; Computer Software
exit voice and loyalty
social media