This paper examines antitrust issues in the electronic book market, with particular focus on pricing practices by Amazon and Apple. It introduces foundational economic concepts — monopoly, oligopoly, and price-fixing — before applying them to the eBook industry. The paper analyzes how Amazon's strategy of deeply discounting eBooks to drive Kindle hardware sales distorts the market, disadvantages publishers and independent retailers, and raises concerns for both the European Commission and the U.S. Department of Justice. It concludes by contrasting real-world market conditions with the theoretical ideal of perfect competition.
This study guide is drawn from PaperDue's library of 130,000+ paper examples across 47 subjects.
The paper demonstrates applied economic analysis: it introduces theoretical frameworks (monopoly, oligopoly, perfect competition) and then systematically applies them to a real-world regulatory dispute. This moves from definition to diagnosis, a structure common in economics and business writing that shows the student can operationalize theory.
The paper opens with definitions of key market structures and price-fixing, establishing the analytical vocabulary. It then narrows to the Amazon–Apple eBook case, providing price data and regulatory context. A third section examines Amazon's loss-leader strategy and its impact on publishers. The paper closes by invoking perfect competition as an ideal against which current market conditions fall short — a classic normative conclusion in applied economics essays.
Within the contemporary economic environment, there are a number of systems and agreements between parties in the purchase-and-consume transaction. In any given marketplace, businesses approach competition in various ways. If one business dominates the market and does not allow for equal or fair competition, a monopoly exists — whether geographic, based on scale, or technologically coercive. Monopolies define and regulate competition in markets; an oligopoly changes this dynamic so that a small number of sellers controls the market. Price and access are among the ways in which market share and market competition continue to evolve.
Price, of course, is the amount of payment required for a good or service. Price-fixing, however, is an agreement reached between businesses to buy or sell at fixed — that is, manipulated — prices in order to control the market. The major difference between a monopoly and an oligopoly is the number of players manipulating the market: a monopoly means only one entity provides the product or service, whereas in an oligopoly the product or service is available from several sources, yet a few large businesses still dominate the market and make it very difficult for new entrants to compete (Friedman, 1990; Schenk, 2010).
One current example involves Amazon and Apple, Inc., which have been noted by both the European Anti-Trust Commission and the United States Department of Justice for allegedly colluding to change the business model for electronic books in ways that required consumers to pay more. The Amazon Kindle and the Barnes & Noble Nook, along with other tablets and smartphones, have changed the manner in which many individuals read books, magazines, and academic journals. Instead of purchasing hard copies, books are now available through libraries as rentals or through discounted purchase via vendors — with Amazon and Barnes & Noble being the largest.
For example, a title that appeared third on the New York Times Best Seller list for Hardcover Fiction — George Saunders' Tenth of December — was priced at $14.21 from Amazon (including shipping for Prime members), with the Kindle eBook at $12.99. Barnes & Noble offered the same title at $14.77 and $12.99 respectively, while most independent bookshops priced it in the $22–$24.00 range. eBook publishers appear to be forced into situations in which their format must conform to the Kindle, Nook, or iPad/Apple standard. Publishers complain that the core issue is the way they are charged for eBooks when Amazon, in particular, offers many titles — including numerous bestsellers — at $9.99 or below. Estimates suggest that Amazon controls approximately 90% of the eBook market; combined with Apple's proprietary protocols, this arrangement raises the price point for publishers and makes the sale of physical copies more difficult (amazon.com; barnesandnoble.com; nytimes.com; Catan & Trachtenberg, 2012).
You’re 58% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.