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by dragonwriter
4408 days ago
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Perhaps, but the particular tactic Amazon is employing here relies on their ability to raise price in a market in which they are dominant (physical book retailing) to acheive an advantage in negotiations related to another market (e-book retailing). It may be that their goal is to drive down prices in the e-book market, but that's orthogonal to whether the action relies on monopoly power in the physical book retail market. |
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What they're doing is actually a demonstration of their lack of monopoly power. When they raise the price they charge for a book, any customers doing comparison shopping who want that book in particular will get it from a different retailer. If Amazon had monopoly power you would instead expect substantially all customers to either pay the higher price to Amazon or not buy the book from anyone.
The market characteristic that Amazon is taking advantage of is that if they raise the price for books from one publisher, it shifts impulse purchases from that publisher to another for customers looking through Amazon's website to find a new book to read. It's essentially the same strategy as putting the product of the publisher you don't like at the back of the store, or replacing mention of it in your promotional materials with mention of a competing product you also sell. The publisher cares a lot more than Amazon about which publisher's books Amazon sells more of, which provides Amazon with negotiating leverage against the publisher. All retailers have that leverage over their suppliers. It doesn't require monopoly power. Obviously being bigger gives you more leverage, but being big and having a monopoly are not the same thing.