A PaidContent report argues that the move will hurt Macmillian in the long run:
Publishers will ultimately be compelled to bring e-book prices down. If Macmillan is the only publisher to move to an agency model, its e-books will be at a disadvantage compared to other publishers in the Kindle store, which is a bad place to be when you’re trying to sell to the more than 5 million people who will own a Kindle by year-end 2010. But even if the other publishers move to the same model, they’ll suddenly realize that with great (pricing) power, comes great (pricing) responsibility, and some will start to lower prices, promotionally at first and then on a more lasting basis. Because there is always a publisher who is hungrier than the rest.I acknowledge that there is a drastic difference between a free eBook and one that costs a few dollars, but it's likely that a price increase of $5 isn't going to drive away many sales. Almost everyone willing to buy a Macmillian book for $9.99 is still willing at $14.99.
Books are not homogenous goods, and they make poor substitutes for one another. If I want a book on Sandy Koufax, I wouldn't substitute away from a higher-price Koufax and instead buy a cheaper book on Don Drysdale. Fans of Twilight aren't going to switch to a different series to save a few dollars.
Of course, there are limits: if an eBook costs $60, that's going to be a large deterrence. But for small price differences, the Kindle crowd is not very price sensitive (they've already shelled out $259 for the device, after all).
Update 2/3: The Onion has a sarcastic quote to this point:
"Macmillan's loss. I would have bought Everything Ravaged, Everything Burned for $9.99, but at $12.99, I'm going with NCIS and, for commercial breaks, an old copy of People."