It's cheaper because more physical games are bought by retailers from suppliers so they can negotiate better deals. The retailers are also motivated to clear stock by pricing it lower because otherwise any leftover inventory becomes a liability; it loses value, it takes up space and it can be damaged, lost or stolen.
It's just the way the industry works, and it's why people who want to see gaming (or movies, music etc) go digital-only are rather deluded if they think it will lower prices.
Its not though, is it. GMG hardly buy tons of physical copies, yet they always have it cheaper than digital.
The reason why its cheaper is simple - Its essentially price fixing, to satisfy the dinosaur brick & mortar stores, they'd be dead if Steam & co sold at the same price as GAME/HMV etc. Even now, people will pay about 30% more for the laziness of having it digitally, rather than save money and get the disc version which HAS to be activated on Steam anyway.
While brick & mortar stores are still relevant, there will be unwritten agreements between publishers and digital distributors to ensure the brick stores have something in the game, because otherwise whats the point of them stocking it, they'd just not bother and put something else on the shelf, not your game. So the DD lot are expected to sell at RRP, while the physical retailers can essentially do as they please. Theres nothing to stop any of the DD's selling cheaper, but it'll stir things up, and thats not going to please the publisher or the retail stores, and so thats not good for the DD's.
So, kill brick & mortar, and there wont be multiple prices any more, just the 1 extortionate price, cos anyone who thinks eliminating competition (which is what Retail Distro is to DD) is good for sensible pricing, needs their head examining. You look at the price of digital copies of Steamworks, Origin & Uplay games, from official retailers and they're still extortionate, full RRP.
Its price fixing, plain and simple, its just that theres absolutely nothing legally or contractually stopping someone from breaking that, but they wont have many suppliers for long.
Quantity has nothing to do with it, its purely about keeping the physical stores on-board, and even then so many people arent put off by paying 30% more. Retail is too big to brush them aside. The console market is probably to thank for this. They wont sell enough PC stuff, but if EA decide to screw retailers on digital, then the Tesco's and GAME's take their ball and go play with Sony, Microsoft, Nintendo etc.