The cost of a page of a commercially-produced journal article has increased, in inflation-adjusted terms, by 300% since 1985 while nonprofit publication costs (journals published by professional societies and university presses) have risen 50%. Costs per page for nonprofit journals in economics is around 17 cents while a page produced by a commercial operation costs 83 cents. Commercial publishers have monopoly power even without constraints on entry because capable authors and referees are attracted to journals with established reputations and copyright law prevents republication of the same article.
One response to the cost increases has been an emerging electronic journal market. Such publications are typically sold by site licenses to university purchase sites.
What are the costs and benefits of such sales? If a journal is sold to maximise publisher profits, scholars are worse off, on average, when universities purchase site licenses than were access sold as individual subscriptions. Here selling a site licence has analogous effects to bundling and increases monopoly profits by reducing variation in willingness-to-pay among buyers. Nonprofit sales of site licences at average cost however provide additional net benefits to scholars when sold as a site licence rather than individually.
An example of the latter is the Berkeley Electronic Press which sent me an email this week asking me to induce my University’s library to subscribe to the B.E. Journals in Economic Analysis and Policy. They also offer the chance for individuals to gain access to free copies of papers even if libraries don’t subscribe provided some nagware is tolerated. The promotion worked – I did ask them to subscibe.