From a worthwhile article in the NY Times surveying a number of facts about e-book and tree-book sales:

Another reason publishers want to avoid lower e-book prices is that print booksellers like Barnes & Noble, Borders and independents across the country would be unable to compete. As more consumers buy electronic readers and become comfortable with reading digitally, if the e-books are priced much lower than the print editions, no one but the aficionados and collectors will want to buy paper books.

Which, translated, reads:  publishers don’t want low e-book prices because then people would buy them.  Note that according to the article, profit margins are larger for e-books than for pulp.  (Confused?  Marginal revenue accounts for cross-platform cannibalization, and is still set equal to marginal cost.)