[fjtorres]

The only argument I've heard that comes close to making any sense for the Manhattan BPHs maintaining high book prices is to maintain the illusion that their books are Premium products.
Which is a valid strategy for low volume, niche products. If your total sales only appeal to a small portion of the total market anyway (say 6-7%) then jacking up prices by a third and sacrificing a quarter of your unit sales (to, say 5%) will result in higher profits. It worked beautifully for Apple with the Macintosh. It made a cash cow out of a marketplace also ran by heading up-market and charging higher prices on hardware and service packs. The same strategy works for plenty of other manufacturer's in cars and stereo equipment, cameras, and clothing.

Only one small problem with that: publishers aren't manufacturers. They don't actually create the product they market. They have to buy it first. (Well, technically they license the copyright in most cases but given the terms of the contracts, they are effectively purchases.)

And that is where the rubber meets the road.
The dirty little secret of Manhattan publishing is they are not getting as many good manuscripts as they used to get. Torstar said it openly just before they flipped Harlequin to the Murdochs. Reports from the RWA conventions confirm it. The sucess of indie publishing confirms it. The recent reports of seven figure advances for already-successful indie authors confirms it; those are all books that the BPHs never got to even bid on.
In the old days, those books might have come to them on a six-figure contract. More likely, mid five figures. Nowadays six figures get politely declined, five get laughed off.

Higher manuscript acquisition costs are already impacting the BPHs. And that is not going away. Just as the flood of quality backlist and indie titles isn't going away; it can only grow bigger because ebooks don't go out of print. And that is also impacting the BPHs on the other side of the supply chain. The monster hits they're not getting? That isn't a slump--that is the new normal. Look at the total sales numbers for bestsellers now and the numbers from a decade ago. They're lower. And they are lower for the same reason network TV ratings are lower now than in the days before cable and movie rentals and Netflix and HBO and Hulu. People are spreading their attention, and dollars, around instead on dumping it on the fad title of the day.
Higher manuscript acquisition costs means less manuscripts going out the door. Which means less tickets in the "blockster book" lottery, which when combined with the lower peak unit sales for the lottery winners means they have to raise prices (further reducing unit sales) to maintain their dollar sales numbers.

So, no; HC isn't going bankrupt any time soon.
But their importance to the market is going to slowly fade away as they trade unit sales for gross margins and their net goes down.

Expect the BPHs to publish less and less new titles and rely more on more on backlist until the beancounters pull the plug on the pbook side and the companies become IP management operations rather than distributors of new content.

The trends are there.
Sixty percent has become thirty and is headed for 25 real soon.
They'll probably stabilize at about 15% in a decade or so which means still more consolidation, more layoffs, more personnel forced into freelancing for Indies. And more high quality Indies...

Agency does mean higher prices because without the higher prices their overlords will get angry and they really don't want to see them angry.