Economics of the Scholarly Journal

Abstract

This paper considers the economic nature of the scholarly journal from a theoretical perspective and concludes that it is what economists call a natural monopoly. Natural monopolies exist when the average price of the good falls over the range of demand, and unless a subsidy is provided the good will not be produced in the quantity that provides the most social benefit. The natural monopoly model of the scholarly journal sheds light on the issue of dual pricing and explains how scholarly publishing can be a highly profitable enterprise. Because subsidies should be easier to implement in electronic systems, this alternative may provide a more effec-tive means of scholarly communication. ibrarians and the publishers of scholarly journals have a long history of disagreement over prices. Librarians feel ex-ploited, and publishers misunderstood. Neither side seems to be able to see the other's point of view.1 This lack of com-