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Elsevier definitely provides a service, and should be remunerated for it. However, arguably most of their income is due to a "coordination game" rather than an
by kvb 14y ago
Elsevier definitely provides a service, and should be remunerated for it. However, arguably most of their income is due to a "coordination game" rather than any value added - see The Parable of the Anarchists Annual Meeting[1].
[1]http://www.econ.ucsb.edu/~tedb/Journals/anarchists.pdf http://www.econ.ucsb.edu/~tedb/Journals/anarchists.pdf
- rayiner 14y agoHow is this different from the usual network effect?
- kvb 14y agoIt's not particularly different (though the low switching costs are somewhat unusual). Regardless, there's a network externality that allows Elsevier to capture excess rents. It's not that Elsevier doesn't provide any value, but at the same time, its profits outpace that value by a large margin. Nonetheless, coordination problems can easily prevent a competitor who pledges not to take those rents from disrupting Elsevier's position, so it's not as easy as saying "there's nothing stopping you from starting a new competitor".