Prices, margins and liquidity constraints: Swedish newspapers, 1990-1992
2005 (English)In: Economica, ISSN 0013-0427, E-ISSN 1468-0335, Vol. 72, no 286, 349-359 p.Article in journal (Refereed) Published
A firm facing liquidity constraints in a recession may increase its price to exploit locked-in consumers in an attempt to boost short-run profits. We find support for such behaviour for Swedish regional newspapers during a deep recession. Newspapers sell both subscriptions and advertising space, and arguably buyers of the latter are less locked in. Newspapers with low solvency raised their subscription prices relative to others. In contrast, the changes in advertising price were independent of the newspapers' financial positions. Hence financial constraints affected firms' pricing behaviour only when consumers were locked in.
Place, publisher, year, edition, pages
2005. Vol. 72, no 286, 349-359 p.
capital-market imperfections, business-cycle, circulation, model
IdentifiersURN: urn:nbn:se:kth:diva-14698ISI: 000228640900009OAI: oai:DiVA.org:kth-14698DiVA: diva2:332739
QC 201005252010-08-052010-08-05Bibliographically approved