spobooks5621225.0001.001 in
    Market Failure?

    Efficient pricing is not sustainable in the declining average cost environment of academic publishing. This begs the question of how the performance of commercial publishers compares to a second-best break-even standard. Our analysis suggests that prices far exceed marginal costs, but do they exceed average costs? One way to assess this question is to examine the pricing of comparable non-profit titles; presumably non-profit publishers set prices closer to if not equal to average costs. If the latter prove to be cheaper, then scholars have a real alternative for disseminating scholarly information in a more efficient fashion.

    Though a comprehensive analysis of non-profit journals is beyond the scope of the present paper it is useful to report some initial qualitative results.[19] In Table 11.4, I calculate average prices and citation rates for both commercial and non-profit ISI-ranked biomedical journals.

    Table 11.4: 1998 Statistics for ISI-Ranked Biomedical Titles, By Date of Initial Publication
    1978-1987 1938-1947
    Non-Profit Commercial Non-Profit Commercial
    Variable N Mean N Mean N Mean N Mean
    PRICE($) 27 287 343 736 17 379 28 838
    CITES 27 10304 343 2159 17 8946 28 7913
    1968-1977 1928-1937
    Non-Profit Commercial Non-Profit Commercial
    Variable N Mean N Mean N Mean N Mean
    PRICE($) 26 306 221 919 4 139 19 591
    CITES 26 13907 221 2720 4 3547 19 3695
    1958-1967 1918-1927
    Non-Profit Commercial Non-Profit Commercial
    Variable N Mean N Mean N Mean N Mean
    PRICE($) 17 446 101 1316 9 294 22 483
    CITES 17 14163 101 5067 9 6402 22 2949
    1948-1957 Before 1918
    Non-Profit Commercial Non-Profit Commercial
    Variable N Mean N Mean N Mean N Mean
    PRICE($) 11 289 58 625 16 292 69 702
    CITES 11 13445 58 3774 16 12593 69 3365

    Titles are aggregated according to the decade of initial publication, going backward from 1987.[20] The discrepancy in average prices and citations for the two groups is striking. For example, if we compare titles that originated at similar points in time, we find that the average non-profit subscription price is between fifty to seventy-five percent less than the commercial rates for titles of similar vintage. At the same time average citation rates for the non-profit journals greatly exceed those of the commercial publishers' in most instances, sometimes by a factor of five. Among commercial journals, prices and citations are positively correlated. Thus, the substantially lower prices of comparable non-profit titles suggests that commercial publishers are setting prices well in excess of average costs.[21] Despite this apparent superiority,[22] the population of ranked non-profit titles is far smaller than that of the commercial journals, 148 versus 1032. Has the lucrative journals market induced too much entry or have the non-profits been too slow to exploit emerging research areas? Although this question deserves further attention it seems clear that the two distinct publishing models exist, each successful in their own way.