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The Impact of the Agency Model on E-book Prices: Evidence from the UK

Maximilian Maurice Gail and Phil-Adrian Klotz ()
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Maximilian Maurice Gail: Justus Liebig University Giessen
Phil-Adrian Klotz: Justus Liebig University Giessen

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: This paper empirically analyzes the effect of the widely used agency model on the retail prices of e-books in United Kingdom. Using a unique cross-sectional data set of e-book prices for a large sample of book titles across all major publishing houses, we exploit cross-genre and cross-publisher variation to identify the mean effect of the agency model on e-book prices. Since the genre information is ambiguous and even missing for some titles in our original dataset, we use a Latent Dirichlet Allocation (LDA) approach to determine detailed book genres based on the book's descriptions. We find that e-book prices for titles that are sold under the agency model are 36% cheaper than titles sold under the wholesale model on average. Our results are robust to different specifications, a Lewbel instrumental variable approach, and machine learning techniques.

Keywords: e-books; agency; resale price maintenance; Amazon; double machine learning; Latent Dirichlet allocation (search for similar items in EconPapers)
JEL-codes: D12 D22 L42 L81 L82 Z11 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2021
New Economics Papers: this item is included in nep-cmp, nep-com, nep-cul and nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:202111

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