Is it just me, or is this system not even in Amazon's best interest? It seems as if Amazon should only use the winning-the-buy-box system in cases in which third parties compete only against each other. When they compete against the author for book sales, the author should always win.
Trust me, everything Amazon does is in its best interest, at least as it perceives its interests. Forcing suppliers to compete on price is built into the system because Amazon perceives that customers mostly care about the price. We're just another group of suppliers who happen to rely on Amazon for fulfillment. In theory, that should produce the lowest price for a new book, but Amazon is stuck in the mindset of paper books being sold on remainder. If others can find a way to sell for less, Amazon is happy.
We agree on what Amazon's motive is, but sometimes they pursue it very unintelligently. Even though price is one criterion for winning the buy box, there have been numerous reports of higher-priced, third-party books winning the buy box away from authors, whose price, if you think about it, is almost always going to have to be lower than what a third party could legitimately charge. Availability is also a criterion, and on that the author should always win as well, since one of the virtues of working with KDP Print is that the book is always listed as in stock.
Because of that, the buy box on paperback books should always belong to the author, at least if that person is using KDP Print. As 123mlh, the current practice could result in lost sales as buyers stare at the inflated price and go somewhere else. Maybe they don't buy anything at that point, and Amazon loses money. Maybe they do buy, realize they've been cheated (by a higher price, inflated shipping, or both) and blame Amazon--which, if Amazon is awarding the buy box to a higher-priced item, is exactly who they should blame.
We both agree that Amazon's thinking is sometimes incorrect. I wish that it would catch up with actual reality at some point.