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Beyond the Dogma of the Fixed Book Price Agreement

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Author Info
Frederick van der Ploeg ()

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Abstract

After describing the essential features of the book market, a welfare analysis of the fixed book price agreement is given. Allowance is made for the opportunity cost of reading. Theoretically, the agreement pushes up book prices and depresses book sales. However, more titles will be published, particularly of books with low price elasticity and that take a long time to read. Potential advantages of better service, distribution and retail networks seem less relevant. The book market is one of imperfect competition, but even so the cross-subsidy argument is unlikely to be valid. A qualitative analysis of the Dutch situation is given. Tentative conclusions are that one should be more concerned about the number of well-stocked bookshops than the diversity of published titles and that debutantes do not face big barriers to entry. One should be even more concerned about the falling proportions of people reading books. Governments fail to set (quantitative) objectives for the fixed book price agreement, which makes it difficult to evaluate its success and contributes to it being treated as a dogma in the book world and the political arena.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 949.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_949

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Related research
Keywords: book market; fixed price agreement; opportunity cost of reading; diversity; accessibility; competition policy;

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Find related papers by JEL classification:
D40 - Microeconomics - - Market Structure and Pricing - - - General
D60 - Microeconomics - - Welfare Economics - - - General
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Deneckere, Raymond & Marvel, Howard P & Peck, James, 1997. "Demand Uncertainty and Price Maintenance: Markdowns as Destructive Competition," American Economic Review, American Economic Association, vol. 87(4), pages 619-41, September. [Downloadable!] (restricted)
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  2. Holahan, William L., 1979. "A theoretical analysis of resale price maintenance," Journal of Economic Theory, Elsevier, vol. 21(3), pages 411-420, December. [Downloadable!] (restricted)
  3. Steven Salop & Joseph Stiglitz, 1977. "Bargains and ripoffs: a model of monopolistically competitive price dispersion," Special Studies Papers 94, Board of Governors of the Federal Reserve System (U.S.).
    Other versions:
  4. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August. [Downloadable!] (restricted)
  5. Howard P. Marvel & Stephen McCafferty, 1984. "Resale Price Maintenance and Quality Certification," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 346-359, Autumn. [Downloadable!] (restricted)
  6. Frank Mathewson & Ralph Winter, 1998. "The Law and Economics of Resale Price Maintenance," Review of Industrial Organization, Springer, vol. 13(1), pages 57-84, April. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Canoy, Marcel & van der Ploeg, Frederick & van Ours, Jan C, 2005. "The Economics of Books," CEPR Discussion Papers 4892, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Seaman, Bruce A., 2009. "Cultural Economics: The State of the Art and Perspectives/Economía de la cultura: estado del arte y perspectivas," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 27, Abril. [Downloadable!] (restricted)
  3. Françoise Benhamou & Stéphanie Peltier, 2007. "How should cultural diversity be measured? An application using the French publishing industry," Journal of Cultural Economics, Springer, vol. 31(2), pages 85-107, June. [Downloadable!] (restricted)
  4. E. Gaffeo & A. E. Scorcu & L. Vici, 2008. "Demand Distribution Dynamics in Creative Industries: the Market for Books in Italy," Working Papers 630, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
    Other versions:
  5. Frederick van der Ploeg, 2005. "The Making of Cultural Policy: A European Perspective," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
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