Journal Price Escalation and the Market for Information: The Librarians' Solution

This article analyzes the problem of journal price escalation as one of equilibrium between two connected segments of the market for information: the library market and the market for individual subscriptions. The relationship between these two segments has been critically affected by the ready availability of cheap, high-quality photocopying, which has encouraged individuals to rely more on libraries' subscriptions to meet their information needs. The economic theories of F. P. Ramsey show that society is better-off if the costs of journals are shared by both market segments. The proposed solution is for libraries to restrict journal use to within the library and to price photocopies optimally in order to encourage an increase in private subscriptions.