1. tWhat is the concentration ratio of the industry?

2. Consider the nature of the competition in the industry - is there evidence of price
rigidity, non-price competition, branding and so on?
3. Is there any evidence of collusion in the industry?
4. Is there a price leader in the market?
5. Is there evidence that abnormal profits exist in the industry?
6. What barriers to entry can you identify in the industry?
7. What evidence of interdependence exists in the industry?

US Bookstore Industry:

1. CR4: 4 = Barnes & Nobles, Books-A-Million, Half Price Books, Amazon.

The CR4 for the US bookstore industry, in 2021, was 43.4%/
Indicates that the four mentioned firms accounted for about 43.4% of the total industry
revenue & market share.
2. Barnes & Noble Vs Amazon:
BN: branding: physical books – cozy, warm intimate shopping experience
Spacious superstore ->promotes lingering, relaxation, and experience
Flagship product: hardcopy books-> touch and feel of paper and leather
People connect to the brand over nostalgia, childhood
Zen experience
“Traditional bookseller”
More than just books motto
Experience with books
No monitor in between buyer and book

Amazon: non-price competition:

seamless convenient online customer experience
website and mobile app
vast selection: hard to find titles, e-books, audiobooks
appeal to digital reading customer base
branded as a “one stop shop for books” as well as other goods
amazon prime fast and reliable shipping
everything can be ordered from the comfort of your couch vs transporting to store
technology: Amazon's use of technology, including artificial intelligence and machine
learning, has enabled the company to develop sophisticated algorithms for
recommending books and optimizing its supply chain. This technology also helps
Amazon to analyze customer data and behavior to identify trends and make data-driven
decisions.
 Price competition: Chains like BN and BAM compete on price through discounts, book
and merchandise
Price pressure from Amazon that offers lower prices due to lower overhead costs
Branding: store ambiance, customer service, product selection and range
Price rigidity: “Price rigidity in the context of the US bookstore industry refers to
the practice of publishers and distributors setting fixed prices for books,
particularly for new releases and bestsellers, rather than allowing retailers to set
their own prices based on market demand. This practice is also known as "price
maintenance" or "resale price maintenance."
One notable example of price rigidity in the US bookstore industry was the
"agency model" that was adopted by several major publishers in the early 2010s.
Under this model, publishers set the retail price of e-books, and retailers such as
Amazon were required to sell them at that price, with the publishers receiving a
percentage of the revenue. This led to higher prices for e-books, which were
often priced similarly to or even higher than the print versions.

https://www.publishersweekly.com/pw/by-topic/digital/content-and-e-books/article/
55566-the-doj-suit-against-publishers-and-apple-the-key-issues.html
1. "Amazon's Physical Stores are Completely Changing the Way We Shop for Books"
by Peter Cohan (Forbes, 2018)
2. "The Amazon Effect: How a New Customer Experience is Changing Everything" by
J. Walker Smith (Kantar Consulting, 2018)
3. "How Amazon Uses Big Data to Drive Success" by Bernard Marr (Forbes, 2015)
4. "Amazon's Secret Weapon: A Competitive Advantage That's Spelled A-W-S" by
Barb Darrow (Fortune, 2016)
5. "Amazon's Growing Power in the Book Business is Facing Resistance" by David
Streitfeld (The New York Times, 2019

3. Collusion:
https://www.publishersweekly.com/pw/by-topic/industry-news/publisher-news/
article/85909-amazon-big-five-publishers-face-yet-another-antitrust-suit-from-
booksellers.html
https://www.reuters.com/legal/amazon-major-publishers-win-dismissal-antitrust-
lawsuits-over-book-pricing-2022-09-29/
https://www.wsj.com/articles/SB10001424127887324425204578597453053469898
 4. No clear price leader in this industry. Prices vary depending on the specific book, format,
edition.
5. https://www.nytimes.com/2023/02/02/business/amazon-earnings.html
https://www.wsj.com/market-data/quotes/BNED/financials
6. High fixed costs, limited economies of scale, brand recognition, online competition
7. Pricing strategies, product selection, industry trends, supplier relationships
1. Price competition: Bookstores, particularly online retailers like Amazon and Barnes &
Noble, engage in frequent price competition with each other. This means that each firm's
pricing decisions may be influenced by the prices offered by its competitors.
2. Product selection: Bookstores must make decisions about which books and other
products to stock in their stores or on their websites. These decisions may be influenced
by what competitors are offering and what customers are looking for.
3. Industry trends: The bookstore industry is subject to broader industry trends, such as the
rise of e-commerce and the decline of physical bookstores. These trends can impact the
decisions made by individual firms in the industry.
4. Supplier relationships: Bookstores must rely on relationships with publishers and
distributors to obtain inventory, which can create interdependence between bookstores
and their suppliers. For example, if a particular book is in high demand, multiple
bookstores may be competing to obtain copies from the same supplier.

Overall, the interdependence in the bookstore industry suggests that individual firms' decisions
may be influenced by the actions of their competitors and by broader industry trends. This can
create challenges for firms seeking to differentiate themselves or maintain profitability in a
competitive market.

can you give real-life evidence?

Sure! Here are some real-life examples of interdependence in the bookstore industry:

1. Price competition: In 2019, Amazon cut prices on a wide range of books in an effort to
compete with Barnes & Noble and other retailers. Barnes & Noble responded by offering
its own discounts and promotions, indicating that the firm was aware of and responding
to Amazon's pricing decisions.
2. Product selection: When Barnes & Noble announced that it was reducing the number of
titles it carried in its physical stores, some industry analysts speculated that the move was
a response to Amazon's dominance in the e-book market. Barnes & Noble may have been
attempting to differentiate itself by focusing on in-store experiences and a curated
selection of physical books.
3. Industry trends: The rise of e-commerce and digital books has impacted the entire
bookstore industry, with many brick-and-mortar stores struggling to compete with online
retailers like Amazon. Some stores, like the independent bookstore Powell's in Portland,
Oregon, have responded to these trends by offering their own e-book store and partnering
with online retailers to sell their books.
4. Supplier relationships: In 2014, Amazon and Hachette Book Group were involved in a
highly publicized dispute over pricing and other terms. The dispute resulted in Amazon
delaying the shipment of Hachette books and removing pre-order buttons from Hachette
 titles. The dispute impacted not only Amazon and Hachette, but also other publishers and
retailers in the industry who were watching to see how the situation would be resolved.

what are your sources for the above response

Here are some sources for the examples I provided in my previous response:

1. Price competition:
 https://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/
81060-b-n-responds-to-amazon-s-latest-salvo-with-slight-discounts.html
2. Product selection:
 https://www.nytimes.com/2018/03/02/books/barnes-noble-books.html
3. Industry trends:
 https://www.nytimes.com/2011/05/09/business/media/09powell.html
 https://www.cnbc.com/2019/06/07/amazon-vs-barnes-noble-bookstore-wars-heating-
up-again.html
4. Supplier relationships:
 https://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/
63450-amazon-vs-hachette-a-fight-with-many-victims.html