The paper deals with the fear-of-losing-customers argument for price rigidity. We address the following question: does the fact that customers are subject to non-renewal clause foster price flexibility? Using a new database in which customers are forced to change their subscription each year, we find that sluggishness in price adjustment exists even when customers are forced to shift from one product to another. Our empirical methodology also allows to account for unobserved heterogeneity and other features of the publishing sector.
|Translated title of the contribution
|Non-renewal clauses and price rigidity: Dynamic panel estimates on publishing data
|Number of pages
|Published - 24 Jan 2011