The behavior does look irrational if you ignore the fact that publishers also want to sell their books in to other retailers and those retailers will not order books if they believe Amazon will deeply undercut them for the same titles. So they ask the publisher to put in place a deal with all the retailers through which the book will be sold that guarantees no one retailer will offer the book below a certain price. This is, of course, quite a lot like price fixing, but seems to be how it's been done in many areas of retail for just about ever.
