Consumer Responses to Dissatisfaction in Loose Monopolies

Abstract

This study tests Albert Hirschman's theories about the behavior of consumers faced with unsatisfactory performance in a “loose monopoly.” Expectations that an elite of quality-conscious consumers would be most sensitive to product or service quality and likely to police the market are supported. Further, the prediction that the most quality-conscious and potentially vocal consumers would exercise the exit option, leaving sellers to deal with a relatively voiceless mass of consumers, is also supported.