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Ebooks have a higher profit margin than paperbacks. I fail to see how selling them over a paperback will hurt your bottom line. If a publisher is concerned that 9.99 best sellers are hurting their profit margins for their hardbacks they can just refuse to sell through retailers that only offer 9.99 best sellers, or they can delay their release in ebook format like S&S is going to do.
If the market pressures from producers are large because the price elasticity of supply is high and the price elasticity for consumers is low then the situation we will end up with in due time is a world where only ebook retailers who offer variable pricing will get the deals to sell the best sellers.
On the other hand, if the market pressures from consumers is high because the price elasticity of demand is high then we'll find that consumers will just refuse to buy from stores that offer variable pricing for best sellers, and publishers will loose out on both the ebook and hardback sale from more and more people as ebook readers increase in popularity like MP3 players did.
I'm personally betting that the price elasticity of demand is fairly high and that trying to charge more to "save books" will only result in publishers charging well over the price equilibrium, and thus LOOSING sales and profit.
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