That's exactly what they want.

I highly doubt they want me to goto CEX and get a used game, 'tis the cheapest though right?

It's the last thing they want you to do and thats why they should sell digital cheaper so this doesn't happen as its non-tradable and then everyones happy but publishers don't think that way

Probably not used games no, but on the whole they want you to buy physical. They don't wan't to piss off retailers. Imagine the backlash if they shipped a million copies of a game then undercut the retail price of the game on xbl/psn? Retailers would probably stop stocking their games in future.

Not if they allow retails to sell codes for digital games. They already do with many digital only games and vouchers for credit. Why not also sell the digital codes for big games too? 

Let's say BO3 was £45 on disc in GAME, but next to it was £35 digital version in GAME. I might buy it from GAME because I get points from them where on the PS store, I don't.

I think that's the way it's going. There's still a market for physical but a few years down the line it will digital that will have the major market share, retailers will probably be selling codes for all games and it will probably be the final blow to brick & mortar stores.

In order to fully understand this, we have to consider why physical copy prices fall so rapidly in the first place.

That part of the equation belongs to retailers. Publishers would actually love to see prices stay higher for longer but for retailers, shelf space is money. Backroom storage is money. Both are limited and both prioritize product that sells well over product that does not. That's why they want a 2 year old game up and gone so that they can make room for what comes next. Inventory management is a massive part of large-scale retail.

Digital doesn't have that issue, at least not intrinsically. There is literally no reason to pore over your digital inventory on a daily basis in order to free up room for next week's releases. Therefore, price cuts are done by schedule and not necessity, which means they're done at much longer intervals.

What I'd really like to see would be a cheaper starting price for digital but the roadblock there is the worry of retailer reaction. If one publisher began doing that and no one else joined in, there would be some risk involved. Of course, if all publishers started doing it, that risk would be mitigated, but they can't legally plan out something like that.