When should Monopolists Care about a Consumer Boycott?

The usual analysis of monopolistic markets focuses merely on the seller ́s behavior. In this paper, we interpret the relationship between seller and buyers as a multiple Ultimatum Bargaining Game. We show that a profit maximizing monopolist may not sell at Cournot Price. When buyers are committed to reject price offers leading to an unfair split of the surplus, a monopolist will have to reduce the sales price substantially. However, as the number of consumers increases the common propensity to punish a monopolist for charging Cournot Prices is similar to the private provision of a public good. Therefore, in the case of many consumers, price taking behavior might emerge unless there are strong enough solidarity effects among the consumers. JEL-codes: C72, C 91, C92, D 12, D 42, L12