When Old Meets New: Wholesale and Agency Models in the Market for Printed and Electronic Books

Date
2018-01-03
Authors
Kim, Antino
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Abstract
In this work, I seek explanations to some of the curious phenomena reported in the book market by focusing on its two important characteristics: (i) the substitutability between the printed- and the e-book versions, and (ii) the mixture of the "old" wholesaling arrangement for printed-book versions and the "new" agency model for e-book versions. In this exploration, using a game theoretic model, I find that an increase in the agency fee that the retailer collects in the e-book market can depress the vitality of the market, which not only ends up hurting the publisher, but also the retailer. This raises a caution that retailers should be moderate in their efforts to get a bigger cut in the agency arrangement. I also find that some of the perplexing phenomena observed in the real world may be due to an excessively large agency fee in the e-book market, and that reducing this fee can lead to a win-win outcome for both the publisher and the retailer.
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Strategy, Information, Technology, Economics, and Society (SITES), agency, game theory, retailing, revenue-sharing, wholesale
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11 pages
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Related To
Proceedings of the 51st Hawaii International Conference on System Sciences
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Attribution-NonCommercial-NoDerivatives 4.0 International
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