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- Title
Prices, Margins and Liquidity Constraints: Swedish Newspapers, 1990–1992.
- Authors
Asplund, Marcus; Eriksson, Rickard; Strand, Niklas
- Abstract
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.
- Subjects
SWEDEN; LIQUIDITY (Economics); RECESSIONS; NEWSPAPERS; ADVERTISING rates
- Publication
Economica, 2005, Vol 72, Issue 286, p349
- ISSN
0013-0427
- Publication type
Article
- DOI
10.1111/j.0013-0427.2005.00418.x