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Article
E-books: A Tale of Digital Disruption
Journal of Economic Perspectives (2015)
  • Richard J Gilbert
Abstract
E-book sales surged after Amazon introduced the Kindle e-reader at the end of 2007 and accounted for about one quarter of all trade book sales by the end of 2013. Amazon’s aggressive pricing led to allegations that e-books were bankrupting brick-and-mortar book booksellers. Amazon’s commanding position as a bookseller also raises concerns about monopoly power and publishers are concerned about Amazon’s power to displace them in the book value chain. I find little evidence that e-books are primarily responsible for the decline of independent booksellers. I also conclude that entry barriers are not sufficient to allow Amazon to set monopoly prices. Publishers are at risk from Amazon’s monopsony (buyer) power and they adopted agency pricing in an effort to promote retail competition and reduce Amazon’s influence as an e-retailer. Although challenged by the Department of Justice, agency pricing may yet prevail in some form as an equilibrium pricing model for e-book sales.
Publication Date
Summer 2015
Citation Information
Richard J Gilbert. "E-books: A Tale of Digital Disruption" Journal of Economic Perspectives (2015)
Available at: http://works.bepress.com/richard_gilbert/36/