Book Value : Intertemporal Pricing and Quality Discrimination in the U.S. Market for Books

Publishers produce books in hardcover and paperback versions with different prices and time of market introduction. Analysis of detailed book-level data reveals that (i) market introduction time has a strong effect on sales, suggesting that time is the crucial dimension of discrimination; (ii) differences in markups cannot be explained by cost differences, hence this is an example of price discrimination; and (iii) there is substantial price rigidity across books and over time: prices depend on cost shifters but not on demand shifters. I propose an explanation for this last finding in terms of the nature of the demand curve