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I'm from germany and here like in many European countries book prices are set by the publisher. It is of course not price fixing, but the effect is similar. Most books are priced the same, competition is not about price.
I just think that this is not the best way to sell goods. Of course it gives some stability and is quite comfortable for the companies. But it has in my opinion two flaws: First it makes you vulnerable to new companies that act different. Since the market is not really competitive disruption is easy and profitable. Look at highly competitive markets to see how difficult it is to enter them, like supermarkets. Wallmart for example did not manage to disrupt the german market, because of this.
Second it is in my opinion simply not the best way to sell. Retailers are specialized in selling. If they are good, they know their customers. They excell in finding the best price for most profit. That is one reason why this way of pricing is seldom used (of course many other factors are very important too, like infastructure etc. This is of course changing too, since you now could sell directly without a middle man). Publishers simply don't make the maximum profit they could with agency.
Of course there are many more factors and there are reasons why the publishers take less profit now, since they think they will make more money long term by agency. Who is right and what thinking is correct I don't know, but for point 1 I think it will backfire again.
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