Books cost too much! (so I wrote a blog post)

Cherokee Gothic

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…

View original post 437 more words

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s