Re: Libraries Urge Justice Departmen to Block Cinven and Candover Purchase of BertelsmannSpringer

["Joseph J. Esposito" <espositoj@worldnet.att.net>]

A related question is, What is the steady-state model?  What would pricing
be if there were no or fewer mergers?  I have no stake in this either way
(at least not today), but we shouldn't assume that there is only one
variable in any system.  Industry consolidation removes costs from
business administration, in some cases huge amounts of costs.  A
fragmented industry overall has higher costs.  These costs are reflected
not only in the pricing of specific products, but also in the
administration of purchasing, cataloguing, etc. ("total cost of ownership"
or TCO).  By focusing on prices alone and not the entire economic context,
the picture gets distorted.

Joe Esposito

----- Original Message -----
From: "Phil Davis" <pmd8@cornell.edu>
To: <liblicense-l@lists.yale.edu>
Sent: Friday, June 06, 2003 8:01 AM
Subject: Re: Libraries Urge Justice Departmen to Block Cinven and Candover
Purchase of BertelsmannSpringer

> Anthony Watkinson argues that while Mark McCabe's research indicates that
> mergers result in higher prices, he disputes that publishers see this as
> cause and effect, and wonders why we have not asked publishers HOW they
> decide to price journals.  With all due respect to Anthony -- in
> philosophical terms -- this is a red herring.  It is not necessary to
> prove intent in order to demonstrate that mergers in the publishing world
> have resulted in higher prices.  Whether mergers directly cause higher
> journal prices, or whether mergers cause changes in the publishing
> environment which then cause higher prices is moot.  The research of
> McCabe and others illustrate the relationship between mergers and price
> increases, and that does not appear to be disputed.  If Anthony can find
> contrary evidence that mergers cause prices to fall, or even price
> stabilization, I would be very interested in seeing this research. --Phil
> Davis, Cornell University