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The Pricing of Academic Journals

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  • McCabe, Mark J.
  • Nevo, Aviv
  • Rubinfeld, Daniel L.

Abstract

In this paper we investigate the claim that academic journals are too expensive. We estimate library demand for academic journals and ask if short run profit maximization by publishers can explain observed prices. Libraries purchase a portfolio of journals so to estimate demand we extend the standard discrete choice model, and estimation methods, to allow for a choice consisting of a subset of a larger set of journals. Unlike the discrete choice model, the model allows for both positive and negative cross-price effects. We estimate the model using library holdings data and find that on average prices in the industry are lower than what static pricing models predict. Furthermore, we simulate the effects of mergers and find that the likely unilateral effect of a merger is to lower prices.

Suggested Citation

  • 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.
    • Handle: RePEc:cdl:oplwec:qt13d1h835
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    References listed on IDEAS

    as
    1. Mark J. McCabe, 2002. "Journal Pricing and Mergers: A Portfolio Approach," American Economic Review, American Economic Association, vol. 92(1), pages 259-269, March.
    2. 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.
    3. Edlin, Aaron S. & Rubinfeld, Daniel L., 2004. "Exclusion or Efficient Pricing? The "Big Deal" Bundling of Academic Journals," Berkeley Olin Program in Law & Economics, Working Paper Series qt9hc6n6ds, Berkeley Olin Program in Law & Economics.
    4. Theodore C. Bergstrom, 2001. "Free Labour for Costly Journals?," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 183-198, Fall.
    5. Aviv Nevo, 2000. "Mergers with Differentiated Products: The Case of the Ready-to-Eat Cereal Industry," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 395-421, Autumn.
    6. Barbera, Salvador & Pattanaik, Prasanta K, 1986. "Falmagne and the Rationalizability of Stochastic Choices in Terms of Random Orderings," Econometrica, Econometric Society, vol. 54(3), pages 707-715, May.
    7. Igal Hendel, 1999. "Estimating Multiple-Discrete Choice Models: An Application to Computerization Returns," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(2), pages 423-446.
    8. Jaehwan Kim & Greg M. Allenby & Peter E. Rossi, 2002. "Modeling Consumer Demand for Variety," Marketing Science, INFORMS, vol. 21(3), pages 229-250, December.
    9. Matthew Gentzkow, 2006. "Valuing New Goods in a Model with Complementarities: Online Newspapers," NBER Working Papers 12562, National Bureau of Economic Research, Inc.
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