Download Now Free registration required
This paper models the book retail market as a dual market. Consumers choose between competitively retailed, well-identified blockbusters and going to a monopoly bookshop to find the best match for their tastes. The author shows that uncertainty about the status on a given title (will it be a blockbuster or not?) places publishers in front of a trade-off between low prices (valuable if they get a blockbuster) and high prices (in the other case). The main effect of this trade-off is that the presence of blockbusters almost never lead to bookshop foreclosure by blockbusters and that a higher number of blockbusters leads to lower price for all books and increased consumer surplus.
- Format: PDF
- Size: 589.7 KB