Amazon and Barnes & Noble are cutting the prices of their e-book readers. Given changes in how e-books are prices (agency model) it looks as if these two are willing to sacrifice some profitability on the e-book reader in order to make some profits on the selling of e-books. So is this a price war?
If you only look at e-book readers, then I would be willing to support the price war conclusion, but given that firms like Amazon and B&N are also making profits on the e-books from the new e-book pricing model, it could also be thought of as cross-subsidization.
Tuesday, June 29, 2010
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