As a former S&S employee, I would have to say, that makes no sense at all.

Willful ignorance? Or do you actually not understand how it works?

30-year veteran of the publishing industry. I know how it works. The idea that publishers would publish a book and willfully restrict sales is absurd. That is also not how book pricing works. Who would choose to drive up unit costs for no reason? Publishers like selling books, and the only thing they like more is selling more books.

As a random person on the internet, it makes sense to me.

Would you please explain what exactly doesn't make sense?

Sorry your comment carries no information. You need to say in at least one sentence why it makes no sense.

Why is this a thing when there is digital publishing? Surely ebooks would be dwarfing physical books now?

They are, but they have a huge spam problem. So does physical books to an extent, but it's meaningfully worse with e-books.

Digital textbooks frequently come with expiration dates. So you pay almost the same amount as a paper book, only for it to disappear shortly after the semester is over.

Other digital books cost almost the same as the paper edition. And with DRM frequently baked into the book, you can't pass it on to the next person.

That said, I am somewhat addicted to erotica on Kindle because the books that scratch my itches aren't available in dead-tree editions.