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Date
Publisher
Philipps-Universität Marburg
Abstract
This paper empirically analyzes the effect of the widely used agency
model on the retail prices of e-books in United Kingdom. Using a
unique cross-sectional data set of e-book prices for a large sample of
book titles across all major publishing houses, we exploit cross-genre
and cross-publisher variation to identify the mean effect of the agency
model on e-book prices. Since the genre information is ambiguous and
even missing for some titles in our original dataset, we use a Latent
Dirichlet Allocation (LDA) approach to determine detailed book genres
based on the book's descriptions. We find that e-book prices for
titles that are sold under the agency model are 36% cheaper than titles
sold under the wholesale model on average. Our results are robust to
different specifications, a Lewbel instrumental variable approach, and
machine learning techniques.
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License
This item has been published with the following license: In Copyright