The setting of resale price by book editors

Abstract

Background: This paper studies the behavior of book prices resulting from the approval of the Law for Promotion of Reading and the Book. The law became official in July 2008. Methodology: We surveyed the literature related with the topic and analyzed the statistical evidence before and after the law came into effect. Results: The evidence is consistent with the commitment theory. The regime of resale price maintenance imposed by law allowed the upstream monopolist (editor) to extend its monopoly power to the downstream market. Conclusions: We conclude that the law changed the price fixation process in the sale of books by increasing the inflation on books at a higher rate in comparison with the inflation that would have been observed in the absence of the law.