Open Access versus Traditional Journal Pricing: Using a Simple “Platform Market” Model to Understand Which Will Win (and Which Should)

Economists have built a theory to understand markets in which, rather than selling directly to buyers, suppliers sell through a platform, which controls prices on both sides. The theory has been applied to understand markets ranging from telephony, to credit cards, to media. In this paper, we apply the theory to the market for scholarly journals, with the journal functioning as the platform between submitting authors and subscribing readers. Our goal is to understand the conditions under which a journal would prefer open access to traditional pricing and under which open access would be better for the scholarly community. Our new model captures much of the richness of the existing economic literature on journal pricing, and indeed adds some fresh insights, yet is simple enough to be accessible to a broad audience. Contact information: McCabe: School of Information, University of Michigan, 105 S. State Street, Ann Arbor, MI 48104; email: [email protected]. Snyder: Department of Economics, Dartmouth College, 301 Rockefeller Hall, Hanover, NH 03755; email: [email protected]. Fagin: Dartmouth College, 301 Rockefeller Hall, Hanover, NH 03755; email: [email protected] Acknowledgements: Fagin is an undergraduate at Dartmouth College writing a thesis on open access. The authors are grateful to the Sloan Foundation for funding.