[andor]

It's also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less.

But what is the alternative for those customers: do they maybe buy the paperback version instead? If that's the case, Hachette might miss out on revenue, but they also keep their paper-based business running and stay somewhat independent of Amazon.

[joedrew]

They don't buy, or they buy something else. If there's one thing that economics has taught us, it's that people will reduce their consumption when prices go up; even water demonstrates price elasticity: http://www.nber.org/papers/w13573.pdf