And people in general probably seriously underestimate the cost of production vs. reproduction. I'm pretty sure the average person thinks the costs associated with a physical book are a lot higher than an ebook and they really aren't--at least for a book involving editors, etc.
But all the figures I've seen suggest that printing/distribution/remainders/etc. are in the low single digits so that even if you ignore any of the costs that are unique to ebooks, there is no reason for ebooks (or for that matter paperbacks) to be significantly cheaper than hardcovers other than price discrimination.
Even before ebooks, it used to be standard for hardcovers to sell at list price for a year or so at which point they came out as paperbacks selling for maybe half the price.
Hmm. What about storage, delivery, returns, etc.? Quote from your source: "Now, I think they’ve underestimated the costs of shipping and warehousing books, and the tremendous cost of accepting returns (for full credit) of unsold books by bookstores — sometimes paying for return shipping, sometimes having the books simply destroyed, and other times selling them in bargain bins for a fraction of the cover price."
