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Bundling Electronic Journals and Competition among Publishers

  • Doh-Shin Jeon
  • Domenico Menicucci

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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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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  1. G. Chemla, 1999. "Downstream competition, foreclosure, and vertical integration," THEMA Working Papers 99-18, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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