The Agency and Wholesale Models in Electronic Content Markets
Justin P. Johnson
Cornell University - Samuel Curtis Johnson Graduate School of Management
March 15, 2013
I investigate strategic interactions and market outcomes in the "agency model" and "wholesale model" of sales. Adopting the agency model initially raises prices, and can (but need not) raise the profits of rival retailers. Nonetheless, consumers prefer the agency model. I relate my results to events in the market for electronic books.
Number of Pages in PDF File: 19
Keywords: e-books, agency model, Amazon, Apple, delegation, antitrust
JEL Classification: K00, K2, L00, L4
Date posted: August 9, 2012 ; Last revised: March 21, 2013
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