Consumption Aspects: Empirical Findings
Consumption is a driver of the book industry, and therefore impacts profits as the state of the economy changes. The overall state is that production rates are almost twice as large as consumption rates—but prices remain high, partly because they are traditionally cost-push in nature. The highest-cost aspects of the industry have traditionally been paper, platemaking, printing, binding, and book returns. Information technology is changing those costs as book production moves online or overseas. As a result, the industry has experienced some severe short-term business cycles that have been devastating to firms like Borders Books, which exited the industry in 2011. Our empirical study shows that price is elastic for all major book categories, indicating that price competition is still alive, though the industry also practices nonprice competition.
KeywordsTransportation Resid Argentina Monopoly
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