Magazine prices revisited

Jonathan L. Willis ()

Journal of Applied Econometrics, 2006, vol. 21, issue 3, pages 337-344

Abstract: This paper examines price adjustment behaviour in the magazine industry. In a frequently cited study, Cecchetti (1986) constructs a reduced-form (S, s) model for firms. Cecchetti assumes that a firm's pricing rules are fixed for non-overlapping three-year intervals and estimates the model using a conditional logit specification from Chamberlain (1980). The estimates are inconsistent, however, due to the duration-dependent specification of the model. Two alternative specifications are used to obtain consistent estimation. The consistent estimates continue to provide strong evidence in favour of state-dependent pricing models, but only weak evidence on the behaviour of price adjustment costs. Copyright © 2006 John Wiley & Sons, Ltd.

Date: 2006
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Working Paper: Magazine prices revisited (2001)
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