Apple, Amazon & The Economics of Price Fixing
There is this interesting case thats going on in US now. It started as US Govt vs Apple . It is now more and more looking like Apple vs Amazon . The key underlying point highlighted by US govt is that Apple forced a change in pricing policy of ebooks which resulted in an increase of prices across the industry. Circa 2009 December , Amazon ruled the roost in ebook industry with a market share of about 90% - monopolistic by any standards. They had a peculiar pricing policy at that time. Regardless of the book, you would end up paying $9.99 as the price. From Amazon's perspective, it was a clear ploy to capture the market. Obviously, publishers did not like a distributor setting the pricing policy. In other words, it was an unstable monopoly. And such markets are ripe for disruptive innovations. Enter Steve Jobs with iPad , the wonderful product that has kept me hooked on ever after that. One of the lesser noticed things that Apple did at that time was to enter into a different ...