Pricing the digital version of a book : wholesale vs. agency models
Document Type
Journal article
Source Publication
INFOR: information systems and operational research
Publication Date
7-2017
Volume
Advance online publication
Publisher
Taylor & Francis Inc.
Keywords
Book, digital version, wholesale pricing, agency pricing, competition
Abstract
We investigate the wholesale and agency pricing models for the digital version of a book made by a publisher, when the print version of the book may exist and one or two retailers sell the book in a market. In the monopoly and duopoly settings, if the revenue-sharing ratio is sufficiently high and the tax rate for the digital version is sufficiently low, then the retail price of the digital version under the agency model is smaller than that under the wholesale model. We also find that the retail price of the digital version under the agency pricing model is more likely to be above that under the wholesale pricing model in the duopoly setting than in the monopoly setting. In the duopoly setting, a sufficiently small degree of substitutability between the two book versions can also make the retail price of the digital version smaller under the agency model than under the wholesale model. Moreover, the existence of the print version is helpful to reducing the retail price of the digital version.
DOI
10.1080/03155986.2017.1348570
Print ISSN
03155986
E-ISSN
19160615
Funding Information
Chunlin Luo was partially supported by the National Natural Science Foundation of China [grant number 71461009], [grant number 71261006]; and the Natural Science Foundation of Jiangxi Province [grant number 20151BAB207061]. Mingming Leng was financially supported by the Research and Postgraduate Studies Committee of Lingnan University [research project number DR13A3]. Xin Tian was partially supported by the National Natural Science Foundation of China [grant number 71390330], [grant number 71202114]. {71461009, 71261006, 20151BAB207061, DR13A3, 71390330, 71202114}
Publisher Statement
Copyright © 2017 Taylor & Francis Inc. Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Luo, C., Leng, M., Tian, X. & Song, J. (2017). Pricing the digital version of a book: Wholesale vs. agency models. INFOR: information systems and operational research. Advance online publication. doi: 10.1080/03155986.2017.1348570