Do Consumers Follow the Flag? Perceptions of Hostility and Consumer Preferences

Do consumers discriminate against foreign products made in countries they deem adversarial? While previous studies have examined how nationalist boycotts influence trade, there is little evidence consumers “follow the flag” more generally. In this study, we employ a conjoint choice survey experiment in the United States and India to assess how individuals’ geopolitical attitudes affect their product preferences. By permitting heterogeneity in perceptions of foreign relations, and examining how these perceptions affect consumer behavior, we reveal one of the micro-level mechanisms at work in the macro-level relationship between trade and conflict. The results show that, when compared to goods made in countries perceived as “neutral” or “friendly,” consumers are 2–6% less likely to select goods made in countries they perceive as being “hostile.” We conclude that, along with organized boycotts, firms, and states, consumers are also partially responsible for the observed correlation between international political relations and trade flows.