Textbook Economics

Wed, 26 Mar 2008 18:13:49 +0000

This is a site that is long overdue in my profession:

The goal of this site is to encourage instructors to take price into account when shopping for texts.

Like doctors prescribing drugs for their patients, college instructors selecting textbooks for their classes have little incentive to pay attention to prices that they themselves do not pay.

Textbook publishers do not advertise their prices. Often it is even difficult to find prices on their websites. Nowhere have we been able to find current price lists for a full selection of competing texts.

Introductory Economics and Intermediate Micro and Macro texts commonly retail for more than $150. Over the past twenty years, despite reduced production costs, real prices have climbed by about three percent per year.[1] By all reasonable estimates, publishers' net revenue per sale is several times larger than marginal cost. While it is true that publishers' revenues must cover fixed as well as variable costs, there is little doubt that successful textbooks are enormously profitable and would be so even at much lower prices.

As economists, we are not surprised that publishers seek to maximize profits. Economic theory predicts that the ratio of a seller's price to marginal cost will be high if demand is inelastic. While publishers are unlikely to respond to moral suasion, they are likely to respond to increased price elasticity. Thus we hope that this website will have two beneficial effects. The direct effect is that it may help you find a better deal for your students. An indirect effect is that the more attention that consumers pay to prices, the more elastic will be demand, and hence the lower will be the profit-maximizing prices.

When I teach, I assign this one. I suspect that most students resell them, and so they are renting, rather than owning, for some (probably sizable) fraction of the sticker price. But more competition would be good for consumers.