Econ 101 for textbook publishers

Amazing what the people of different countries can learn about each other and themselves when they stop the fighting and take the time to talk to each other.

Perhaps that is what the politicians and CEOs are really worried about.

The sad part is that given enough public pressure, the publishers might lower their prices in the US, however, they'll just relocate their production lines to those other countries to retain the profits.

Butrflynet


I have no doubt that I the publishers could lower their costs by publishing off shore they would regardless, public pressure or not. The fact remains as usual the American public pays the freight. I have to wonder if this is just the tip of an iceberg. Are there many more similar situations?

When the German Imperial Navy sent gunboats against the Chinese forts on the Yangtse river, they were shot full of holes--by state-of-the-art guns provided by Krupp. The German press, in digging into the story, found that not only was Krupp supplying China with this artillery, but that the Chinese, and any other foreign customer, was paying half or less than half the price Krupp charged the Prussian government. When questioned about this, Krupp boldly asserted that the price differential arose from the need to fund research and development, and then issued a dark threat about the consequences for Prussian military preparedness if his sales practices were interferred with. The Imperial government bought that story, hook, line and sinker. What was good for Krupp was held to ultimately good for Germany, and the converse, that anything bad for Krupp would be bad for Germany, was accepted.

It seems that similar arguments are advanced by the drug companies when the issue of cheaper drugs in Canada is brought up. If the text book publishers had good PR people, they could surely cook up a similar story.

The only way textbook companies will change their prices is if sales suffer enough for their bottom line to suffer. Pure economics.

Here's a little bit from the University of Wisconsin law school that might make you cringe, though: the law school runs a little book kiosk where you can buy books for your classes. Now, you're not required to buy them there, but most instructors, for whatever reason, don't distribute their reading lists until shortly before the material is covered -- and this sometimes occurs midterm. Since law books are generally not sold in bookstores -- even those that mainly sell textbooks -- the students are left with two options: 1) buy from the kiosk, and pay whatever price they're asking; or 2) find a cheaper source for the book, wait a week to get it, and be hopelessly out of the loop in a competitive course where all reading material is expected to be known inside out before it is discussed.

And the kicker: a little bit of research on the web reveals that the school -- not the publisher, but the school -- is marking each text up by as much as twenty dollars. If every student in a year -- that's about 300 people -- buys the book at a $20 markup, the school has turned a $6000 profit on that one book in about two days. Yes, they do have some overhead, but it is miniscule compared to the money they bring in on their markups: a stand, some shipping, and a part-time employee to sell the things.

You might think it's an innocent enterprise, but consider this: the books are not labeled with prices, and the receipts the kiosk issues do not itemize what was purchased, so it takes considerable effort and sorting to parse through the eight items you were required to purchase, figure out what was what, and compare prices. Moreover, the books come sealed in plastic, and cannot be returned if the plastic is removed.

I'm thinking a nice little group project would be to formulate an antitrust suit against the law school, but I doubt they've got the time.