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Bundling electronic journals and competition among publishers

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Author Info

  • Doh-Shin Jeon
  • Domenico Menicucci

Abstract

Site licensing of e-journals has been revolutionizing the way academic information is distributed. However, many librarians are concerned about the possibility that publishers might abuse site licensing by practicing bundling. In this paper, we analyze the private and social incentives for the publishers to use bundling in the context of STM electronic journal market. In the short run in which the number of journals is exogenously given, we find a strong conflict between the two incentives: each publisher finds bundling optimal and bundling increases the industry profit but reduces social welfare. However, in the long run we find that publishers might have higher incentives to introduce new journals under bundling than without bundling and, in this case, bundling can reduce the industry profit while increasing social welfare. Finally, we examine publishers’ incentive to provide links to the websites of the rival publishers under bundling and show that even asymmetric publishers have incentive to interconnect.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 678.

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Date of creation: Apr 2003
Date of revision: Aug 2005
Handle: RePEc:upf:upfgen:678

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Web page: http://www.econ.upf.edu/

Related research

Keywords: Bundling; site licensing; interconnection; merger;

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References

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  1. Armstrong, Mark, 1999. "Price Discrimination by a Many-Product Firm," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 151-68, January.
  2. repec:fth:calaec:16-01 is not listed on IDEAS
  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. Gilles Chemla & Gilles Chemla, 2003. "Downstream Competition, Foreclosure and Vertical Integration," Post-Print halshs-00679847, HAL.
  5. Yannis Bakos & Erik Brynjolfsson, 1997. "Bundling Information Goods: Pricing, Profits and Efficiency," Working Paper Series 199, MIT Center for Coordination Science.
  6. G. Chemla, 1999. "Downstream competition, foreclosure, and vertical integration," THEMA Working Papers 99-18, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  7. McAfee, R Preston & McMillan, John & Whinston, Michael D, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 371-83, May.
  8. Chemla, Gilles, 2003. "Downstream Competition, Foreclosure, and Vertical Integration," Economics Papers from University Paris Dauphine 123456789/6313, Paris Dauphine University.
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