Is it really true that different authors can have wildly different royalty rates? I thought the range only spanned a few percentage points.
Advances don't really count, since they are paid out of future royalties.
It's simple market economics. Stephen King will sell far more copies which means publishers will make far more money off his books. So he gets a significantly higher cut of the per book profit (aka royalties) because publishers will still end up making more money off his book than they will of a Uwem Akpan book.
Put it this way, if Mr. King's publisher didn't pay him a higher royalty fee don't you think another publisher would be willing to based on the large amount of money at stake? So again we're back to basic economics.
You talk about simple market economics, but the publishing industry seems to be a cartel, and authors are on the whole largely shafted. The music industry is the same way...