PRICE AND INCOME ELASTICITY OF DEMAND OF PRINTED NEWSPAPER

Abstract

This paper analyzes the behavior of the demand for printed newspapers sold in newsstand in Brazil in relation to impacts of products, initially considered as potential substitutes: sales by subscription, popular newspaper and internet access. The universe of this study includes the demand for newspapers that circulate in Distrito Federal, Rio de Janeiro and São Paulo for the period from January 2004 to December 2012. In order to provide empirical evidence, the paper presents an econometric analysis used the approach cointegration of Pesaran et al. (2001) which is based on a self-regressive structure of distributed lags allowing capture of short and long-term relationships and elasticities with respect to the demand for newspapers. The results suggest that the demand for newspapers is apparently very sensitive to changes in cover prices in the short run and that the income was not statistically significant in explaining the variations in sales in newsstand, both in the short and the long run. In the Distrito Federal and Rio de Janeiro, a positive variation of 1% over the newspaper's cover price results in a reduction in the short run demand for newspapers also of approximately 1%. In the long run, the fallback in newspaper demand considering a price increase is more sensitive in São Paulo, where the reduction reaches 2%.