conflict between publisher and online seller. In this case, which would
the publisher prefer: (1) the time when e-books didn’t exist, or (2)
the young e-book market when Amazon set prices?Suggested References
The following articles examine the existence of scale and scope economies in a variety of settings.
Clark, J. “The Economies of Scale and Scope at Depository Financial Institutions: A Review of the
Literature.” Economic Review(Federal Reserve Bank of Kansas City, 1988): 16–33.
Koshal, R. K., and M. Koshal. “Do Liberal Arts Colleges Exhibit Economies of Scale and Scope?”
Education Economics8 (December 2000): 209–220.
Silk, A. J., and E. R. Berndt. “Scale and Scope Effects on Advertising Agency Costs.” Marketing Sci-
ence(Winter 1993): 53–72.
Sung, N., and M. Gort. “Economies of Scale and Natural Monopoly in the U.S. Local Telephone
Industry.” Review of Economics and Statistics82 (November 2000): 694–697.
Wholey, D., et al. “Scale and Scope Economies among Health Maintenance Organizations.” Jour-
nal of Health Economics15 (December 1996): 657–684.
The following article reviews research estimating cost functions.
J. Panzar. “Determinants of Firm and Industry Structure,” in R. Schmalensee and R. Willig (Eds.),
Handbook of Industrial Organization. Amsterdam: North-Holland, 1989, pp. 3–59.272 Chapter 6 Cost AnalysisABC D E F G HI
1
2 Pricing Print Books and E-books
3
4
5 Book Publisher Q 80 2.4P 2Pe
6
7 Print Books E-Books Total
8 Price Quantity Profit Profit Profit
9
10 $25.00 60.00 $315 $0 $315
11
12 Combined Profit
13 E Book Seller Qe 80 4Pe $315
14
15 E-Books
16 Price Quantity Revenue Profit
17
18 $20.00 0.00 $0 $0
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