Economics and Usage of Digital Libraries: Byting the BulletSkip other details (including permanent urls, DOI, citation information)
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18. In a single period game, each publisher would attempt to forecast the size of journal budgets, and set prices so that its average absolute demand elasticity was close to one. However, in a multi-period context, with budgets increasing each period, a firm's pricing strategy changes. It is possible to show that firms will set prices so that absolute elasticities in each period lie between zero and one. The intuition is that lowering the price (and thus the absolute elasticity) in each period preserves future sales and, combined with budget growth, raises total profits.
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