Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 470: Prices, Margins and Liquidity Constraints: Swedish Newspapers 1990-1996

Marcus Asplund (), Rickard Eriksson and Niklas Strand
Additional contact information
Marcus Asplund: Department of Economics, London Business School, Postal: London Business School, Regent’s Park, NW1 4SA London , UK
Rickard Eriksson: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden
Niklas Strand: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: For Swedish newspaper firms, a market with high switching costs, the subscription market, and a market with low switching costs, the advertising market, are of approximately equal importance. When Sweden enters a deep recession, we find that liquidity constraints influence the pricing decision in the former, but not the latter market. This gives support to theories stressing the magnifying effect of liquidity constraints on the business cycle.

Keywords: Liquidity constraints; switching costs; price adjustment; newspaper industry

JEL-codes: D43; E32; G33; L82

22 pages, October 29, 2001

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