Settlement in the Apple E-Book Price-Fixing Case

Given that I’m an antitrust hawk, I suppose I should be celebrating the settlement in the Apple book publishers e-book pricing-fixing case.

But I’m not so sure.

My guide for antitrust cases has always been what’s best for consumers in the long run. And that’s not all clear in this case.

In April the Department of Justice accused Apple and five publishers of fixing e-book prices through a cooperative arrangement that raised e-book prices to around $13 to $15 each. The technical and legal details of the case are complex, but it seems clear that the firms were effectively fixing prices.

Normally that sort of thing incenses me. Not just because it involves firms taking extra money from consumers. Fixing prices decreases competition and results in economic inefficiency. It’s bad for the economy and bad for consumers.

But in this case, it’s not so straightforward.

The wildcard in this situation has been Amazon, which had been discounting e-books at $10 or less. That sounds like a bonanza for consumers. The problem is that Amazon already is in a dominant position in the industry, and such discounting could increase Amazon’s influence even more.

That could be good for consumers in the long run. But it also could mean less competition and fewer options for consumers in the future, which would be bad.

At this point, it’s hard to know whether the settlement is good, bad, or indifferent.

In the meantime, there’s not much more we can do but keep reading.

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