Optimal Pricing of Academic Journals in a Two-Sided Model: The Effect of Copyright

Academic journals act as platforms upon which authors communicate their ideas to readers. As such, a journal needs to attract both authors and readers in order to be able to provide their service, which is beneficial to both readers and authors. However the interrelationship between authors and readers on the journal platform is even more complex than a simple meeting place where ideas are exchanged. Readers attract authors to a journal, and authors attract readers to a journal, and both are attracted to higher quality journals. In this sense, journals are very similar to other two-sided platforms (for example, credit rating agencies) that need to consider the optimal price to charge to users on each side, and the quality of the service. In this paper we analyse optimal management of a profit maximizing, fully on-line, monopolistic journal in a two-sided model. We consider the following aspects of the journal management. Firstly, is it possible that it is optimal for one of the two prices (the reader price and the author price) to be equal to zero? Is it true that a journal that optimally sets the reader price to zero (i.e. an “open access” journal) is characterized by a lower quality level than a closed access journal (i.e. one with a strictly positive subscription price for readers) as is often thought to be true? How would the removal of copyright in the papers published impact upon the optimal choices of a journal?