4 ms·

I understand that industry collusion in necessity goods (food/gas/medicine) is bad for the consumer but why can't book publishers and wholesalers act together t

by chime 15y ago

I understand that industry collusion in necessity goods (food/gas/medicine) is bad for the consumer but why can't book publishers and wholesalers act together to raise the price of books 100x if they so wish? Let the market decide if that is a good decision or not. In fact, if they raise prices on certain category of books (e.g. educational books), it will only hurt them because it will encourage students to buy used older versions from secondary market, regardless of what version is supposed to be used in class. Also, why are e-books any different from paper books? Let them price them however they want. If Hollywood and theaters want to sell movie tickets at $50/person, why shouldn't they be allowed to?

alphaoverlord 15y ago
Necessity vs. non-essential is quite a slippery slope as there is a gradient of need. How would one draw the line? As Enron and countless other examples show, a purely free market does not always result in an optimum outcome, even for something as perfectly fungible.
- WalterBright 15y ago
  Enron wasn't operating in a perfectly free market. The electric power business in California is heavily regulated, in particular, the utilities were forced by law to pay whatever Enron demanded, and also by law were unable to pass those costs along to the ratepayers.
  - alphaoverlord 15y ago
    Generally Enron is described as an example of deregulation gone wrong as Enron was able to control supply. That has nothing to do with passing off costs to ratepayers. Even if that's not a perfect example, do we really disagree that a pure free market doesn't always lead to the optimum outcome? Also, I don't think its civil to downvote simply b/c you disagree.
azylman 15y ago
The problem is that that's not actually how it works. For things like textbooks, people don't really have a choice on whether or not to buy it - when everyone colludes to price it very high, the people who need them have no recourse other than to buy them. You nonchalantly say that students can just buy older versions, but that is often impossible. Homework problems are regularly taken from the textbook, and those problems are regularly changed from version to version. Additionally, when publishing companies are coming out with a new version every couple years, there's not a lot of availability for used books either.
- chimeracoder 15y ago
  Nowhere is price gouging so clear as in the case of textbooks. You have almost perfectly inelastic demand, and a single supplier. You don't need to be an economist to figure out how that one's going to work out. This semester, my econometrics professor had a professional publisher 'compile' his seminar notes into a 'reader'. This basically meant printing out the pdfs and putting them in cheap binding, the kind that you might get at Staples for a negligible sum. He was shocked when they ended up costing almost $100 per copy for the student, since there was no copyright/licensing in question - they were his own class notes. If a college student told me that they spent over $1000 per semester in textbooks, I would have no trouble believing it at all. Used books are not always available or viable. Workbooks are less common, but now publisher have 'access keys' that they are using to force students to buy the new books. My professors have always been understanding when I refuse to do the online exercises that require the access keys (unless they send me unlocked copies), but I can imagine not all students are so lucky. I'm also fortunate that my classes (CS, statistics, economics) tend to have one textbook per course, and they usually aren't so dependent on the in-book homework problems. For CS in particular, you can often use online books/tutorials in case of the text, depending on the class. But for my friends in humanities-based classes, with perhaps ten overpriced books for a course? I pity the fools - or rather, I pity their empty wallets!
jamesaguilar 15y ago
The whole point is that the market can't decide if there is an effective monopoly of colluders.

by chime 15y ago

alphaoverlord 15y ago

Necessity vs. non-essential is quite a slippery slope as there is a gradient of need. How would one draw the line? As Enron and countless other examples show, a purely free market does not always result in an optimum outcome, even for something as perfectly fungible.

WalterBright 15y ago
Enron wasn't operating in a perfectly free market. The electric power business in California is heavily regulated, in particular, the utilities were forced by law to pay whatever Enron demanded, and also by law were unable to pass those costs along to the ratepayers.
- alphaoverlord 15y ago
  Generally Enron is described as an example of deregulation gone wrong as Enron was able to control supply. That has nothing to do with passing off costs to ratepayers. Even if that's not a perfect example, do we really disagree that a pure free market doesn't always lead to the optimum outcome? Also, I don't think its civil to downvote simply b/c you disagree.

azylman 15y ago

The problem is that that's not actually how it works. For things like textbooks, people don't really have a choice on whether or not to buy it - when everyone colludes to price it very high, the people who need them have no recourse other than to buy them. You nonchalantly say that students can just buy older versions, but that is often impossible. Homework problems are regularly taken from the textbook, and those problems are regularly changed from version to version. Additionally, when publishing companies are coming out with a new version every couple years, there's not a lot of availability for used books either.

chimeracoder 15y ago
Nowhere is price gouging so clear as in the case of textbooks. You have almost perfectly inelastic demand, and a single supplier. You don't need to be an economist to figure out how that one's going to work out. This semester, my econometrics professor had a professional publisher 'compile' his seminar notes into a 'reader'. This basically meant printing out the pdfs and putting them in cheap binding, the kind that you might get at Staples for a negligible sum. He was shocked when they ended up costing almost $100 per copy for the student, since there was no copyright/licensing in question - they were his own class notes. If a college student told me that they spent over $1000 per semester in textbooks, I would have no trouble believing it at all. Used books are not always available or viable. Workbooks are less common, but now publisher have 'access keys' that they are using to force students to buy the new books. My professors have always been understanding when I refuse to do the online exercises that require the access keys (unless they send me unlocked copies), but I can imagine not all students are so lucky. I'm also fortunate that my classes (CS, statistics, economics) tend to have one textbook per course, and they usually aren't so dependent on the in-book homework problems. For CS in particular, you can often use online books/tutorials in case of the text, depending on the class. But for my friends in humanities-based classes, with perhaps ten overpriced books for a course? I pity the fools - or rather, I pity their empty wallets!

jamesaguilar 15y ago

The whole point is that the market can't decide if there is an effective monopoly of colluders.