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Bundling Electronic Journals and Competition among Publishers

Author

Listed:
  • 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.

Suggested Citation

  • Doh-Shin Jeon & Domenico Menicucci, 2006. "Bundling Electronic Journals and Competition among Publishers," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 1038-1083, September.
  • Handle: RePEc:tpr:jeurec:v:4:y:2006:i:5:p:1038-1083
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    References listed on IDEAS

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    1. repec:dau:papers:123456789/6313 is not listed on IDEAS
    2. Theodore C. Bergstrom, 2001. "Free Labour for Costly Journals?," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 183-198, Fall.
    3. Chemla, G., 1999. "Downstream Competition, Foreclosure, and Vertical Integration," Papers 99-18, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
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    5. Yannis Bakos & Erik Brynjolfsson, 1999. "Bundling Information Goods: Pricing, Profits, and Efficiency," Management Science, INFORMS, vol. 45(12), pages 1613-1630, December.
    6. Mark Armstrong, 1999. "Price Discrimination by a Many-Product Firm," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 151-168.
    7. R. Preston McAfee & John McMillan & Michael D. Whinston, 1989. "Multiproduct Monopoly, Commodity Bundling, and Correlation of Values," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 371-383.
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    9. Barry Nalebuff, 2004. "Bundling as an Entry Barrier," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 159-187.
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    Citations

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    Cited by:

    1. Doh-Shin Jeon & Domenico Menicucci, 2012. "Bundling and Competition for Slots," American Economic Review, American Economic Association, vol. 102(5), pages 1957-1985, August.
    2. Mueller-Langer, Frank & Watt, Richard, 2012. "Optimal pricing and quality of academic journals and the ambiguous welfare effects of forced open access: a two-sided model," MPRA Paper 40191, University Library of Munich, Germany.
    3. Choi, Jay Pil & Jeon, Doh-Shin, 2016. "A Leverage Theory of Tying in Two-Sided Markets," TSE Working Papers 16-689, Toulouse School of Economics (TSE), revised Mar 2018.
    4. repec:bla:ecinqu:v:56:y:2018:i:2:p:931-954 is not listed on IDEAS
    5. Jeon, Doh-Shin & Menicucci, Domenico, 2009. "Bundling and Competition for Slots: On the Portfolio Effects of Bundling," IDEI Working Papers 574, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jul 2011.
    6. repec:bla:jindec:v:66:y:2018:i:2:p:301-349 is not listed on IDEAS
    7. 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.
    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. 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 222-255, May.
    10. Doh-Shin Jeon & Domenico Menicucci, 2017. "The Benefits of Diverse Preferences in Library Consortia," Journal of Industrial Economics, Wiley Blackwell, vol. 65(1), pages 105-135, March.
    11. repec:wly:econjl:v:125:y:2015:i:586:p:f1-f30 is not listed on IDEAS
    12. Hurkens, Sjaak & Jeon, Doh-Shin & Menicucci, Domenico, 2016. "Leveraging Dominance with Credible Bundling," CEPR Discussion Papers 11304, C.E.P.R. Discussion Papers.
    13. Sjaak Hurkens & Doh-Shin Jeon & Domenico Menicucci, 2019. "Dominance and Competitive Bundling," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 1-33, August.
    14. 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.
    15. Jeon, Doh-Shin & Menicucci, Domenico, 2008. "Money, fame and the allocation of talent: Brain drain and the institution of science," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 558-581, June.
    16. Mark J. McCabe & Christopher M. Snyder, 2018. "Open Access as a Crude Solution to a Hold‐Up Problem in the Two‐Sided Market for Academic Journals," Journal of Industrial Economics, Wiley Blackwell, vol. 66(2), pages 301-349, June.
    17. Haucap, Justus & Loebert, Ina & Spindler, Gerald & Thorwarth, Susanne, 2016. "Ökonomische Auswirkungen einer Bildungs- und Wissenschaftsschranke im Urheberrecht," DICE Ordnungspolitische Perspektiven 86, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    18. Mark Armstrong, 2010. "Collection Sales: Good Or Bad For Journals?," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 163-176, January.
    19. Mark Armstrong, 2015. "Opening Access to Research," Economic Journal, Royal Economic Society, vol. 125(586), pages 1-30, August.
    20. Mark McCabe, 2004. "Information goods and endogenous pricing strategies: the case of academic journals," Economics Bulletin, AccessEcon, vol. 12(10), pages 1-11.
    21. repec:ebl:ecbull:v:12:y:2004:i:10:p:1-11 is not listed on IDEAS
    22. Mark J. McCabe & Christopher M. Snyder, 2005. "Open Access and Academic Journal Quality," American Economic Review, American Economic Association, vol. 95(2), pages 453-459, May.

    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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