Open Access as a Crude Solution to a Hold-up Problem in the Two-Sided Market for Academic Journals

Mark J. McCabe, Christopher M. Snyder

NBER Working Paper No. 22220
Issued in May 2016
NBER Program(s):LE, PR

The move from traditional to open-access journals—which charge no subscription fees, only submission fees—is gaining support in academia. We analyze a two-sided-market model in which journals cannot commit to subscription fees when authors (who prefer low subscription fees because this boosts readership) make submission decisions. This leads to a hold-up problem, manifested as excessive subscription fees. Open access is a crude attempt to avoid hold up by eliminating subscription fees. We compare the efficiency and profitability of traditional versus open access under various market structures (monopoly, Bertrand competition) and extensions (non-profit journals, bundling, hybrid pricing), using our theoretical findings to understand the evolution of the market for academic journals in the Internet age.

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Document Object Identifier (DOI): 10.3386/w22220

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