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Are Durable Goods Consumers Forward-Looking? Evidence from College Textbooks

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  • Judith Chevalier

    (Yale School of Management and NBER.)

  • Austan Goolsbee

    (University of Chicago Booth School of Business.)

Abstract

We test whether textbook consumers are forward-looking, using a large new data set on textbooks sold in college bookstores during the ten semesters from 1997 to 2001. The data strongly support the hypothesis that students are forward-looking with low short-run discount rates and that they behave as if they have rational expectations of publishers' revision behavior. Data from a second new data set on the market prices of used books at Amazon Marketplace also support the hypothesis of rational, forward-looking behavior. Simulation results indicate that students are sufficiently forward-looking that publishers cannot consistently raise revenue by accelerating current revision cycles. (c) 2009 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

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Bibliographic Info

Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 124 (2009)
Issue (Month): 4 (November)
Pages: 1853-1884

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Handle: RePEc:tpr:qjecon:v:124:y:2009:i:4:p:1853-1884

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Cited by:
  1. Umit G. Gurun & Gregor Matvos & Amit Seru, 2013. "Advertising Expensive Mortgages," NBER Working Papers 18910, National Bureau of Economic Research, Inc.
  2. Cabolis, Christos & Clerides, Sofronis & Ioannou, Ioannis & Senft, Daniel, 2007. "A textbook example of international price discrimination," Economics Letters, Elsevier, vol. 95(1), pages 91-95, April.
  3. Benjamin Reed Shiller, 2012. "Digital Distribution and the Prohibition of Resale Markets for Information Goods," Working Papers 59, Brandeis University, Department of Economics and International Businesss School.
  4. Phillip Leslie & Alan Sorensen, 2009. "The Welfare Effects of Ticket Resale," NBER Working Papers 15476, National Bureau of Economic Research, Inc.
  5. Andrew T. Ching & Tülin Erdem & Michael P. Keane, 2013. "Learning Models: An Assessment of Progress, Challenges and New Developments," Economics Papers 2013-W07, Economics Group, Nuffield College, University of Oxford.
  6. Julie Holland Mortimer, 2005. "Price Discrimination, Copyright Law, and Technological Innovation: Evidence from the Introduction of DVDs," NBER Working Papers 11676, National Bureau of Economic Research, Inc.
  7. Jean-Pierre H. Dube & Günter J. Hitsch & Pranav Jindal, 2012. "The Joint Identification of Utility and Discount Functions From Stated Choice Data: An Application to Durable Goods Adoption," NBER Working Papers 18393, National Bureau of Economic Research, Inc.
  8. Bruce A. Blonigen & Christopher R. Knittel & Anson Soderbery, 2013. "Keeping it Fresh: Strategic Product Redesigns and Welfare," NBER Working Papers 18997, National Bureau of Economic Research, Inc.
  9. Nair, Harikesh, S., 2006. "Intertemporal Price Discrimination with Forward-Looking Consumers: Application to the US Market for Console Video-Games," Research Papers 1947, Stanford University, Graduate School of Business.

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