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E-book Pricing Under the Agency Model: Lessons from the UK

Author

Listed:
  • Maximilian Maurice Gail

    (Justus-Liebig-University Giessen)

  • Phil-Adrian Klotz

    (Heinrich Heine University Düsseldorf)

Abstract

This paper empirically analyzes the relation between the widely used agency model and retail prices of e-books sold in the UK. Using a unique cross-sectional data set of e-book prices for a large number of book titles across all major publishing houses, we exploit cross-genre and cross-publisher variation to examine the interplay between the agency model and e-book prices. Since the genre information is ambiguous and even missing for some titles in our original data set, we also apply a latent Dirichlet allocation (LDA) approach to determine detailed book genres based on the book’s descriptions. Using propensity score matching, we find that retail prices for e-books sold under the agency model tend to be systematically lower than book titles with similar characteristics sold under the wholesale model, approximately 20%. This result varies with the exact sales rank of a book and is driven by the so-called long tail books. Our results are robust across various regression specifications and double machine learning techniques.

Suggested Citation

  • Maximilian Maurice Gail & Phil-Adrian Klotz, 2025. "E-book Pricing Under the Agency Model: Lessons from the UK," Journal of Industry, Competition and Trade, Springer, vol. 25(1), pages 1-39, December.
    • Handle: RePEc:kap:jincot:v:25:y:2025:i:1:d:10.1007_s10842-025-00451-y
    DOI: 10.1007/s10842-025-00451-y
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    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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