2.8 In 2013, a federal judge ruled that Apple colluded with five major U.S. publishers to artificially

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2.8 In 2013, a federal judge ruled that Apple colluded with five major U.S. publishers to artificially drive up the prices of e-books (which could be read on Apple’s iPad). Apple collects a 30% commission on the price of a book from the publisher. Why would Apple want to help publishers raise their price? Given Apple’s commission, what price would a book cartel want to set? (Hint: The marginal cost of an e-book is virtually zero.)

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Microeconomics

ISBN: 9780133456912

7th Edition

Authors: Jeffrey M. Perloff

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