E-book market: recent developments and competitive concerns

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Master project, Competition and Market Regulation 2011

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E-book market: recent developments and competitive concerns

  1. 1. Master Project E-book market Recent developments and competitive concerns June, 2011 Rocío Prieto Julieta Schiro
  2. 2. Outline•  Background - E-books and devices - Relevant elements•  Players and pricing models - Publishers and retailers - Wholesale and agency models•  Competitive concerns - Wholesale and agency models•  Concluding remarks
  3. 3. Background“...book-length publication in digital form, consisting of text,images, or both...”E-readersNon e-readers Applications - Nook for iPad To read formats previously - Kindle for BlackBerry supported only by certain e- - Kindle for Windows PC readers
  4. 4. BackgroundRelevant elements in the European marketFixed Price Agreements/Laws Where? Coverage?VAT differential Cultural item Electronic serviceLack of information
  5. 5. E-book market Players and pricing modelsSells at a RRP minus a Sets final price,discount Publisher allowing for a given discount (e.g. 5%)Sets final price to Gets a commission (%consumers. Retailer of the sale)Full control over Less control overstrategic variables strategic variables
  6. 6. Competitive concerns Wholesale model US Amazon selling at $9.99 (and buying at $15) Amazon retailer/manufacturer: Its e-books (.azw) only supported by Kindle Applications Amazon’s “goals” Strengthen its position in the market Foster Kindle sales Publishers’ concerns Perceived value of e-books Amazon’s bargaining power
  7. 7. Competitive concerns Wholesale model Concerns Marginalization of: “Pure” retailers Retailers/manufacturers E-readers manufacturers Restriction of consumers’ choice Pro-competitive effects Centralization of pricing decisions helps internalizing indirect network effects
  8. 8. Competitive concerns Agency model Similar and higher prices observed: Texas Attorney Connecticut Attorney OFT EC Facilitating factors Concentration Multi-market contacts Repeated interaction Increasing trend in D Transparency & observability
  9. 9. Competitive concerns Agency model Concerns Reduced competition Price increase Pro-competitive effects (?) Free riding among retailers Carrying larger inventories Double marginalization
  10. 10. Concluding remarks•  Both pricing models rise differentcompetitive concerns (predation downstreamvs. collusion upstream)•  The development of the market should becautiously monitored•  To be able to deal with these from an EUstandpoint, it is necessary to betterharmonize pricing and taxing policies
  11. 11. THANK YOU Rocío Prieto Julieta Schiro

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