Re: Confidentiality clause is back in at Nature

[Phil Davis <pmd8@cornell.edu>]

Peter, I think you may be conflating *pricing transparency* with 
*price discrimination*.

Price discrimination is charging different prices to different 
customers for the same good or service. It is practiced because 
it results in greater profits than if a company charged a uniform 
price to all customers. Price discrimination is practiced at the 
movie theatre (age discrimination), for a haircut (gender 
discrimination), and for airline tickets (by charging business 
travelers more than vacationers). Consumers (and collection 
librarians are consumers too) often despise price discrimination. 
Those who pay more don't believe that it is "fair" to pay more 
for the same service, and those who pay less may feel that they 
could have received a better deal.  Nature simply doesn't want 
astute people like Rick Anderson to compare the price they 
charged him with the price they charged another library.  If Rick 
thought he was charged too much, he would argue for a better 
deal.  If he got a great deal, he may tell his colleagues at 
other institutions what he paid.  Enter the confidentiality 
clause.

Price discrimination only works when the producer has some 
monopoly power, which means that the customer cannot equally 
substitute one product or service for another. In an exact sense, 
each journal is a monopoly since it is composed of a collection 
of unique articles not found in any other product.  There is no 
use substituting the journal Nature for Science -- you need them 
both.  On the other hand, you can swap an Emerald journal with 
another Emerald journal because they contain the exact same 
collection of articles (sorry, couldn't help myself ;-)

Price Transparency, on the other hand, should lead to lower 
prices for buyers, since it leads to "perfect information" in the 
marketplace, and hence competition.

--Phil Davis
(dangerous enough to know a little economics, which will inevitably get me
in trouble on this list by the likes of Mark Danderson, who was actually
trained in economics).


At 03:22 PM 9/28/2006, you wrote:
> While I understand the desire for pricing transparency, I can't
> think of an industry where it is practiced, or understand the
> value to the buyer, since it often favors the seller.
>
> When I was a publisher and purchasing printing, composition, or
> Web services, there was no openness in pricing. I am sure in
> other services purchased by universities, from IS services to
> construction, contracts are awarded in response to RFPs, often on
> a closed bid basis.
>
> Perhaps there are economists on the listserv who can comment on
> whether open or hidden pricing trends lower pricing for buyers.
> My experience with printing services is that closed pricing
> drives down prices, as printers cut margins to the minimum or
> bundle services to gain business. I would think that librarians
> have the greatest bargaining power when they are not operating
> from a take-it-or-leave-it menu of prices.
>
> Peter Banks
> Banks Publishing
> Publications Consulting and Services
> pbanks@bankspub.com
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Philip M. Davis
PhD Student (and former Science Librarian)
Department of Communication
336 Kennedy Hall
Cornell University
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email: pmd8@cornell.edu
work phone: 607 255-0354
web: http://www.people.cornell.edu/pages/pmd8/