Quote:
Originally Posted by pwalker8
Publishers may have very little direct contact with specific end-buyers, but they have a whole lot more information than Amazon when it comes to how many books they can sell at what prices for various categories of authors (i.e. well known best sellers, well known mid-tier, etc...). Publishers have been experimenting with various prices points for various types of books for a long time.
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No, [the publishers] do not have "a whole lot more information" they have information that is a whole lot more
aggregated, and therefore is
a whole lot less useful for estimating elasticities. Is the fact that we sold less books this holiday season for higher unit prices because of the price, or because of an economic downturn? Is the fact that people are buying more $20 Harry Potter books than $25 Stephen King books because they're cheaper, or because people like Harry Potter more?
Statistically, heavily aggregated data means very few
'degrees of freedom' and a model that is nowhere near robust, because so many contributory factors end up being conflated.
I know all this because (i) I've got a degree in Statistics & (ii) because I've actually worked in the field of Regulatory Economics/Competition Law, including on calculating price elasticities.