Quote:
Originally Posted by petrucci
If books were not fungible, then there would be no reason to collude on prices as publishers do not sell the same title, and the books would not be in competition because they would not be interchangeable. For example, there would be no point in Nike and Ford colluding on prices. Their products are not interchangeable with one another.
If books are fungible, then there is reason to collude on prices, as it could increase profits. Now, the article argues that the collusion did not hurt consumers, as there were lower priced books available. However, it does not address the issue that some books can be fungible with others, while other books may not be. This leads me to believe that the big publishing houses believe that some of their books are fungible with one another, while other books are not. This would explain the necessity of collusion, rather than one company simply raising prices. It also explains why the lower priced books would not undermine their higher prices.
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You have it backwards. Collusion only makes sense with products that are non-fungible. Consider the example of a highly fungible commodity like corn. No one really cares what bushel of corn they have, just so long as they have their bushel of corn. If someone colluded to keep the price of their corn artificially high, this collusion would fail, as people would simply be able to buy identical bushels of corn at a cheaper price from some other supplier.
Books are clearly not fungible. Any bushel of corn is interchangeable with any other bushel of corn, but books are not interchangeable with just any random book. People don't pay more than they have to for a fungible product. Despite the availability of free or 99 cent books, the book market is dominated by books that cost more. People won't just read any old book, a fine wine is not interchangeable with a bottle of Ripple, a Van Gogh is not interchangeable with just any painting.