Academic textbooks are really expensive. The current version of Mankiw’s principles text is $186 in hardcover. I’ll go out on a limb and conservatively guess that the marginal cost of producing another copy is no more than $25. Of course there are substantial fixed costs but…
Here’s what I think is going on.
Textbooks are a type of network good. The more people use a given text, the more others will also want to use it. So the market approaches winner take all with just a few books selling well and making profits. This is probably true of all kinds of books.
Weirdly, the books that don’t sell well (the losers) almost have to price high as they are trying to cover their fixed costs over a small sales volume.
The winners don’t have to price high to break even, but given that demand is high and relatively inelastic, why…
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