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Do Publicly Traded Firms Price Differently from Private Firms?

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  • Ernesto Schargrodsky

Abstract

This article analyzes whether publicly traded firms price differently from privately held firms in the product markets. Our empirical evidence shows that, in the U.S. newspaper industry, firms increase their prices when their ownership structure changes from private to public. The effects are robust and significant. A plausible explanation is that private owners enjoy more freedom than public managers to expand circulation and distort content, pursuing the consumption of nonpecuniary benefits of control. Additional evidence is consistent with this interpretation. Public newspapers show lower prices when insiders' ownership participation is higher. Moreover, private newspapers appear more likely than public newspapers to endorse a candidate during presidential campaigns. To my knowledge there are no previous studies comparing pricing by private and public companies. Copyright 2003, Oxford University Press.

Suggested Citation

  • Ernesto Schargrodsky, 2003. "Do Publicly Traded Firms Price Differently from Private Firms?," American Law and Economics Review, American Law and Economics Association, vol. 5(1), pages 32-60.
    • Handle: RePEc:oup:amlawe:v:5:y:2003:i:1:p:32-60
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    Cited by:

    1. Porcher, Simon, 2017. "The ‘hidden costs’ of water provision: New evidence from the relationship between contracting-out and price in French water public services," Utilities Policy, Elsevier, vol. 48(C), pages 166-175.
    2. Simon Porcher, 2019. "Does Contracting for the Provision of Public Services Decrease Prices? Evidence from French Water Public Services," Working Papers hal-02145863, HAL.
    3. Li, Li, 2018. "Private sector participation and performance of county water utilities in China," China Economic Review, Elsevier, vol. 52(C), pages 30-53.

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