Sofronis K. Clerides

"Strategic interactions, market information and predicting the effects of mergers in differentiated product markets," International Journal of Industrial Organization Volume 20, Issue 10, December 2002, pages 1385-1408.

JEL codes: L1, L82
Keywords: price discimination, quality discrimination, book publishing industry

Abstract: Publishers produce books in hardcover and paperback versions with different prices and time of market introduction. Analysis of detailed book-level data reveals that (i) differences in markups cannot be explained by cost differences, making this an example of quality discrimination; (ii) market introduction time strongly affects sales, suggesting that time is the crucial dimension of discrimination; and (iii) there is substantial price rigidity across books and over time: prices depend on cost shifters but not on demand shifters. I propose an explanation for this last finding in terms of the nature of demand in this market.