41 Pages Posted: 14 Jul 2006 Last revised: 22 Apr 2016
Date Written: April 12, 2016
The move from traditional to open-access journals — which charge no subscription fees, only submission fees — is gaining support in academia. We analyze a two-sided-market model in which journals cannot commit to subscription fees when authors (who prefer low subscription fees because this boosts readership) make submission decisions. This leads to a hold-up problem, manifested as excessive subscription fees. Open access is a crude attempt to avoid hold up by eliminating subscription fees. We compare the efficiency and profitability of traditional versus open access under various market structures (monopoly, Bertrand competition) and extensions (non-profit journals, bundling, hybrid pricing), using our theoretical findings to understand the evolution of the market for academic journals in the Internet age.
Keywords: open access, scholarly journal, two-sided market, competition
JEL Classification: L14, L82, D40, L31
Suggested Citation: Suggested Citation
McCabe, Mark J. and Snyder, Christopher M., Open Access as a Crude Solution to a Hold-up Problem in the Two-Sided Market for Academic Journals (April 12, 2016). Available at SSRN: https://ssrn.com/abstract=914525 or http://dx.doi.org/10.2139/ssrn.914525