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Magazine prices revisited

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  • Jonathan L. Willis

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.

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  • Jonathan L. Willis, 2006. "Magazine prices revisited," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(3), pages 337-344, April.
    • Handle: RePEc:wly:japmet:v:21:y:2006:i:3:p:337-344
    DOI: 10.1002/jae.836
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    1. Victor Aguirregabiria, 1999. "The Dynamics of Markups and Inventories in Retailing Firms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(2), pages 275-308.
    2. Jonathan L. Willis, 2006. "Magazine prices revisited," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(3), pages 337-344, April.
    3. Arellano, Manuel & Honore, Bo, 2001. "Panel data models: some recent developments," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 53, pages 3229-3296, Elsevier.
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    6. Margaret E. Slade & G.R.E.Q.A.M., 1998. "Optimal Pricing with Costly Adjustment: Evidence from Retail-Grocery Prices," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(1), pages 87-107.
    7. Bo E. Honoré & Luojia Hu, 2004. "Estimation of Discrete Time Duration Models with Grouped Data," CAM Working Papers 2004-07, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
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    11. Cecchetti, Stephen G., 1986. "The frequency of price adjustment : A study of the newsstand prices of magazines," Journal of Econometrics, Elsevier, vol. 31(3), pages 255-274, April.
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    1. Denis Fougère & Erwan Gautier & Hervé Le Bihan, 2010. "Restaurant Prices and the Minimum Wage," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(7), pages 1199-1234, October.
    2. David Staines, 2023. "Stochastic Equilibrium the Lucas Critique and Keynesian Economics," Papers 2312.16214, arXiv.org, revised Jun 2024.
    3. Siddharth Shirodkar & Boyd Hunter, 2019. "Factors underlying the likelihood of being in business for Indigenous and non-Indigenous Australians," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 22(1), pages 5-27.
    4. Knotek II, Edward S., 2008. "Convenient prices, currency, and nominal rigidity: Theory with evidence from newspaper prices," Journal of Monetary Economics, Elsevier, vol. 55(7), pages 1303-1316, October.
    5. Lein, Sarah M., 2010. "When do firms adjust prices? Evidence from micro panel data," Journal of Monetary Economics, Elsevier, vol. 57(6), pages 696-715, September.
    6. Aguirregabiria, Victor & Gu, Jiaying & Luo, Yao, 2021. "Sufficient statistics for unobserved heterogeneity in structural dynamic logit models," Journal of Econometrics, Elsevier, vol. 223(2), pages 280-311.
    7. Dhyne, Emmanuel & Fuss, Catherine & Pesaran, M. Hashem & Sevestre, Patrick, 2011. "Lumpy Price Adjustments: A Microeconometric Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(4), pages 529-540.
    8. John W. Keating & Isaac K. Kanyama, 2015. "Is sticky price adjustment important for output fluctuations?," Review of Keynesian Economics, Edward Elgar Publishing, vol. 3(3), pages 392-418, July.
    9. Jonathan L. Willis, 2006. "Magazine prices revisited," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(3), pages 337-344.
    10. Emi Nakamura & Jón Steinsson, 2008. "Five Facts about Prices: A Reevaluation of Menu Cost Models," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(4), pages 1415-1464.
    11. William Greene, 2007. "Discrete Choice Modeling," Working Papers 07-6, New York University, Leonard N. Stern School of Business, Department of Economics.
    12. Erwan Gautier, 2009. "Les ajustements microéconomiques des prix : une synthèse des modèles théoriques et résultats empiriques," Revue d'économie politique, Dalloz, vol. 119(3), pages 323-372.
    13. Boyd Hunter & Matthew Gray & Heather Crawford, 2016. "Who Cares and Does it Matter for the Labour Market?: A Longitudinal Analysis of the Labour Force Status of Indigenous and Non-Indigenous Carers," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 19(1), pages 33-51.
    14. Dotsey, Michael & King, Robert G., 2005. "Implications of state-dependent pricing for dynamic macroeconomic models," Journal of Monetary Economics, Elsevier, vol. 52(1), pages 213-242, January.
    15. Kevin X. D. Huang & Jonathan L. Willis, 2018. "Sectoral Interactions and Monetary Policy under Costly Price Adjustments," Annals of Economics and Finance, Society for AEF, vol. 19(2), pages 337-374, November.

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