If Amazon decided to sell e-books for $9.99, that’s surely not the revenue maximizing price for the publishers in the long run, or the profit maximizing price w

If Amazon decided to sell e-books for $9.99, that’s surely not the revenue maximizing price for the publishers in the long run, or the profit maximizing price when looking at e-books in isolation. Amazon had a huge interest in locking users in to the Kindle platform. This is something they were willing to pay a lot of money for, and so they would rationally have priced e-books below the revenue maximizing price. After they “won”, Amazon would either have raised e-book prices to take advantage of their monopoly, or maybe kept prices low as a loss leader.