A Simultaneous-Equation Analysis of Pricing, Circulation, and Advertising Revenue for Leading Consumer Magazines

Abstract

Abstract This study of leading U.S. consumer magazines presents a system of simultaneous equations regressions to model the complex relations among price, circulation, readership profile, and advertising revenues. It is claimed and then empirically demonstrated that changes in price and quality of readership have concurrent and opposing effects on the circulation and advertising revenues of leading consumer magazines. These analyses reexamine prior research that argued that the conventional wisdom that revenue from advertising subsidizes consumer prices is incorrect.