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I believe the ebooks and physical books both have their pros and cons. However, from a pricing standpoint I also believe the ebook should be cheaper than the lowest cost physical version available as a new book (as opposed to competing against used books). I believe it should be cheaper for the same reason that paperbacks are cheaper than hardbacks --
1) The paperback is cheaper to produce than the hardback.
2) The paperback is priced lower because time has passed since the initial release and the lower price entices new sales.
Both these reasons apply to ebooks as well, and ebooks are even cheaper to produce than paperbacks. Ebooks do not have printing costs, negligible distribution costs, and publishers don't have to pay for "returns" (unsold books), which is a huge cost of physical books -- some estimates have 1/3 of books "sold" being returned to the publishers. So, publishers could set the price of ebooks at exactly the same price of their lowest physical book, and then discount the ebook price by the costs incurred by printing, distribution, and having to refund the purchase of 1/3 of the books sold. They would still make the same profit as they are making on physical books. However, even then the ebook would have a higher "profit margin" than the cheapest paperback because the ebook cost less to produce.
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