The Impact of Ebooks on Print Book Sales: Cannibalization and Market Expansion

The impact of ebooks on print book sales has received increasing attention in the publishing industry. This paper estimates a dynamic model of consumer book purchase, format choice and e-Reader adoption decisions. I combine a unique individual level purchase history panel data set with publicly available book prices and characteristics. Consumers have persistent heterogeneous general reading tastes, format utility from ebook reading, and rational expectation over book purchase when adopting an e-Reader. My model estimates allow me to quantify the degree of cannibalization and market expansion e ect. Taking supply side prices as exogenously given, counterfactual simulation shows that 2/3 of the ebook sales come from cannibalizing print books and 1/3 purely come from market expansion. The introduction of ebooks increases consumer surplus by $709.5 million in year 2011. The model also have implications on publishers and platforms pricing strategies under di erent contract schemes. Finally, I nd that models do not take dynamic device adoption decision into account substantially underestimate the price elasticity