On the Antitrust Economics of the Electronic Books Industry

Posted by Social Science Research Network

On the Antitrust Economics of the Electronic Books Industry – Germain Gaudin (Heinrich Heine Universität Dusseldorf – Duesseldorf Institute for Competition Economics) and Alexander White (Tsinghua University – School of Economics & Management)

ABSTRACT: We show that the rise in ebook prices following Apple’s entry into the market can be explained by Amazon’s Kindle device losing its essential position. When consumers began accessing Amazon’s ebooks using third-party devices, such as the iPad, Amazon’s incentive to keep ebook prices low diminished. This explanation contrasts with a recent U.S. court decision claiming that price increases stem from a switch in the form of contracts used by ebook publishers and retailers. We show that, if contracts revert to their prior form, as stipulated by the court decision, this will likely push ebook prices up even further.