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Bundling Electronic Journals and Competition among Publishers

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  • Doh-Shin Jeon
  • Domenico Menicucci

Abstract

Site licensing of electronic journals has revolutionized the way academic information is distributed. However, many librarians are concerned about the possibility that commercial publishers might abuse site licensing by the practice of bundling. In this paper, we analyze how bundling affects journal pricing in the market of scientific, technical, and medical electronic journals and offer a novel insight on the bundling of a large number of information goods. We find that (i) when bundling is prohibited, surprisingly, industry concentration does not affect prices; (ii) when bundling is allowed, each publisher finds bundling profitable and bundling increases industry profits while reducing social welfare; and (iii) any merger among publishers already active in the market is profitable but reduces social welfare. (JEL: D4, K21, L41, L82) (c) 2006 by the European Economic Association.

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Bibliographic Info

Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 4 (2006)
Issue (Month): 5 (09)
Pages: 1038-1083

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Handle: RePEc:tpr:jeurec:v:4:y:2006:i:5:p:1038-1083

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References

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  1. Armstrong, Mark, 1996. "Multiproduct Nonlinear Pricing," Econometrica, Econometric Society, vol. 64(1), pages 51-75, January.
  2. Armstrong, Mark, 1999. "Price Discrimination by a Many-Product Firm," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 151-68, January.
  3. Bergstrom, Ted, 2001. "Free Labor for Costly Journals?," University of California at Santa Barbara, Economics Working Paper Series qt5jc0893p, Department of Economics, UC Santa Barbara.
  4. G. Chemla, 1999. "Downstream competition, foreclosure, and vertical integration," THEMA Working Papers 99-18, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  5. Mark McCabe & Christopher Snyder, 2004. "The Economics of Open-Access Journals," Working Papers 04-18, NET Institute, revised Nov 2004.
  6. repec:fth:calaec:16-01 is not listed on IDEAS
  7. Yannis Bakos & Erik Brynjolfsson, 1999. "Bundling Information Goods: Pricing, Profits, and Efficiency," Management Science, INFORMS, vol. 45(12), pages 1613-1630, December.
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Citations

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Cited by:
  1. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Interconnection among Academic Journal Websites: Multilateral versus Bilateral Interconnection," IDEI Working Papers 579, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Doh-Shin Jeon & Jean-Charles Rochet, 2010. "The Pricing of Academic Journals: A Two-Sided Market Perspective," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 222-55, May.
  3. Mark McCabe, 2004. "Information goods and endogenous pricing strategies: the case of academic journals," Economics Bulletin, AccessEcon, vol. 12(10), pages 1-11.
  4. Doh-Shin Jeon & Domenico Menicucci, 2005. "Money, fame and the allocation of talent: Brain drain and the institution of science," Economics Working Papers 805, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2005.
  5. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: On the Portfolio Effects of Bundling," TSE Working Papers 09-069, Toulouse School of Economics (TSE), revised Jul 2011.
  6. Mark Armstrong, 2010. "Collection Sales: Good Or Bad For Journals?," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 163-176, 01.
  7. Jeon, Doh-Shin & Menicucci, Domenico, 2008. "Money, Fame and Allocation of Talent: Brain Drain and the Institution of Science," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
  8. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: Sequential Pricing," TSE Working Papers 09-074, Toulouse School of Economics (TSE).
  9. Aaron S. Edlin & Daniel L. Rubinfeld, 2005. "The Bundling of Academic Journals," American Economic Review, American Economic Association, vol. 95(2), pages 441-446, May.
  10. McCabe, Mark J. & Nevo, Aviv & Rubinfeld, Daniel L., 2006. "The Pricing of Academic Journals," Berkeley Olin Program in Law & Economics, Working Paper Series qt13d1h835, Berkeley Olin Program in Law & Economics.

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