“Cultural Exception? The Impact of Price Regulation on Prices andVariety in the Italian Book Market”
Christos Genakos, Mario Pagliero, Lorien Sabatino andTommaso Valletti
Fixed book price (FBP)agreements are a form of resale price maintenance commonly applied to books invarious countries. FBP restricts retail price competition with the aim ofpromoting book production variety. Yet, despite its popularity and applicationin many countries, there is no empirical evidence on its effects. We offersystematic evidence on the impact of FBP on book variety and prices using adetailed new dataset from Italy that includes the universe of books publishedand bought, before and after the introduction of FBP. Our results indicate thatFBP raises prices without significantly affecting the number of new bookspublished in the marketplace. However, it also increases considerably thevariety of books actually bought, especially from independent bookstores. We estimate a structural model of demand that accounts for both effects,finding that consumers overall benefited from the regulation.