A specific way for deniable encryption I read the summary of deniable encryption on wikipedia:
https://en.wikipedia.org/wiki/Deniable_encryption

Then I read a question, by doom123 on security.SE:
https://security.stackexchange.com/questions/34684/truly-deniable-encryption

But I had a subtly different problem which can be stated as follows:


Alice wants to send Bob the book "Mocking Jay" which is banned in Bob's country. 
Alice encrypts "Mocking Jay" to data MJ with the password P1.
Using another book of similar size (or by trimming a larger book), say the "The Hobbit", she processes the data MJ and computes password P2.


The solution to this problem will allow Bob to claim that he maintains a copy of "The Hobbit" (assuming that "The Hobbit" is not banned of course), while being able to read  "Mocking Jay". The solution, in theory, should also allow Bob to plausibly deny that there's any other copy hidden in the data "MJ" other than "The Hobbit"; or like the aforementioned security.SE question, should allow "MJ" to hold any number of copies (and thus any number of passwords), providing Bob the excuse of acknowledging only one copy that he has the knowledge of.

The answer provided by the user lynks to the question posed by doom123 solves the problem for storing data on a hard-disk. Is there a general solution to this problem?

UPDATE 1
With regards to the answer provided by fgrieu I am slightly modifying the question. Is it possible to add a third layer (and an arbitrary number of further layers) of such encryption? What I mean is, with Mocking Jay, The Hobbit, and Silmarillion (assuming that the books are roughly the same in size) as inputs, is it possible to create an encrypted output say MJTHSI? I am alright with the passwords being the output as well. Decrypting with password P1 will reveal Mocking Jay. If rubber-hose is used password P2 can also be given up revealing The Hobbit (with the intention of ultimately protecting Silmarillion which can be revealed using P3).
I understand the question as asking for a method such that:


after step 3., we'll have a reasonably small password P2;
deciphering MJ using P1 will give "Mocking Jay";
deciphering MJ using P2 will give "The Hobbit", or a meaningful extract of that, at least comparable in size to MJ;
MJ is produced at step 2. without "The Hobbit" as input.


By an entropy argument, that's impossible; for that would imply that the amount of information necessary to go from "Mocking Jay" to "The Hobbit" (or a meaningful extract thereof) can be summed-up in the short password P2.

Update: a possibility is that "The Hobbit" (or a meaningful extract thereof) is embedded in the decoding program, but that brings back the problem stated in the last paragraph of the present answer.



Remove the requirement that MJ is produced without "The Hobbit" as input, and it becomes possible. We can devise an encryption process with input ("Mocking Jay", P1), ("The Hobbit", P2), or more generally any arbitrary collection of literary work and distinct associated passwords, producing a ciphertext; and a matching decryption procedure accepting ciphertext and password, that will produce the appropriate work for the password, and an error (or garbage) for other passwords. The system can be resistant to cryptanalysis and key search, even for relatively short passwords, if we accept that the decryption procedure requires a few seconds, which enables password stretching using e.g. scrypt.

Thanks to data compression, the ciphertext can be smaller than "The Hobbit" (I assume "Mocking Jay" is smaller). We can even think of reusing the compression dictionary built from "The Hobbit" to compress "Mocking Jay", so that the ciphertext is of size more comparable to a mediocre compression of "The Hobbit", if we accept that P2 is necessary in addition to P1 to read "Mocking Jay", or equivalently that P1 is some extension of P2, or that the cipher protecting "The Hobbit" is of mediocre security.

Update: I have no implementation in mind, but this is a relatively simple matter with competent use of data compression, key stretching, and symmetric cryptography.

Huge problem is: an intelligent person caring to analyses the decryption procedure or the file format specification will likely understand that it is intended for deniable encryption, and then the risk is high that rubber-hose cryptanalysis will be used; something that would be avoided if the original problem could be solved; but it can't.