Question

You are a literary agent for an author who writes very popular mystery novels. As an agent, you receive 1% of the total revenues from the sale of the book. You are currently in negotiations with Amazon about the price Amazon will charge for your author’s e-books, You believe that your author’s books are unique – no one else writes similar stories. What implication does this belief have on your (1) Estimate of the price elasticity of demand for your author’s books (2) Negotiations with Amazon on the price of the books

Answer 1

If the author is really good then making online presence through Amazon will increase market and as demand will be huge if prices go down. It is likely that online copies will be cheaper as there is no cost of printing, then even when average price of books go slightly down, due to larger sale agent may increase earnings.

As author's style of writing is unique, I may convince about high demand and keeping high prices to generate more revenue to all Amazon, author and agent.