American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Agency Pricing and Bargaining: Evidence from the E-Book Market
American Economic Journal: Microeconomics
(pp. 146–91)
Abstract
This paper studies the pricing implications of wholesale and agency contracts when input terms are determined through bargaining. We develop a structural Nash-in-Nash bargaining model and show that the distribution of bargaining power determines whether agency contracts raise or lower retail prices relative to wholesale contracts. We apply the model to the e-book market, which transitioned from wholesale to agency contracts after the expiration of a ban on agency contracting. Estimates indicate that the retailers have most of the bargaining power. Counterfactual simulations show that most-favored-nation clauses raise prices but would lower the profits of the publishers and Amazon.Citation
De los Santos, Babur, Daniel P. O'Brien, and Matthijs R. Wildenbeest. 2026. "Agency Pricing and Bargaining: Evidence from the E-Book Market." American Economic Journal: Microeconomics 18 (2): 146–91. DOI: 10.1257/mic.20220232Additional Materials
JEL Classification
- C78 Bargaining Theory; Matching Theory
- D86 Economics of Contract: Theory
- K21 Antitrust Law
- L14 Transactional Relationships; Contracts and Reputation; Networks
- L42 Vertical Restraints; Resale Price Maintenance; Quantity Discounts
- L81 Retail and Wholesale Trade; e-Commerce
- L82 Entertainment; Media