Of course they know the economics of the situation. What they have been attempting to do is to cement a price point for eBooks in their customer's heads so that

Of course they know the economics of the situation. What they have been attempting to do is to cement a price point for eBooks in their customer's heads so that they can continue to charge $10, $14, $16 etc for a megabyte of text for a new release. I think they've been successful so far. Just because they are doing something illogical doesn't mean they are stupid; they are doing it to make more profits.