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I would have thought it potentially applied very much to the market for Big 5 ebooks for the reasons set out in my original post. The publisher sets a very high price in the absence of competition. If Indie Competition and/or shadow competition force that price down towards the optimum, then everyone makes more. The retailer receives less agency commission on each sale at the lower price, but more than makes up for this with increased sales. Likewise the Publisher makes less money per sale but more than makes up for this by more sales. The marginal cost of each ebook is negligible. Even the author will be better off depending of course on the terms of their contract with the publisher.
Meanwhile, in the real world, neither Indie competition nor piracy is reducing Big 5 agency prices. I suspect this is at least partly because the Big 5 have print book sales to consider and seem to take the view that pricing ebooks so as to effectively compete with Indies will cannibalise print sales. As I mentioned in another thread, I doubt sales of paper books play any role whatsoever in the Indie market, where paper sales are very much ancillary to ebooks and sales of print books a bonus.
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