Students Feel Pain of Textbook Price Discrimination

Every semesters, college students flock to the campus bookstore for textbooks while bitterly complaining about the price. According the GAO, a college student spends roughly $900 a year for textbooks alone. To make matters worse, prices of textbooks grow twice as fast as the rate of inflation. The textbook publishers set their prices so high because of price discrimination. In the United States, publishing companies charge a high price while a lower price is charged for the same book in other countries

Publishers own a monopoly because students must adhere to class syllabi; thus the first condition for price discrimination is met. Students often try to maneuver around paying full price such as buying the book used or buying a cheaper international version. The publisher utilizes certain practices in order to allow for price discrimination remains. By constantly introducing newer editions, used books become obsolete, and, therefore, the publisher eliminates arbitrage, the second condition for price discrimination. Publishers also bundle textbooks with extraneous features such as CD-ROMs and Internet companion sites in order to justify such a high price. Since foreign countries are relatively less wealthy than the United States, publishers will often produce lower-priced, international versions. This satisfies the last two conditions, namely two identifiable sub markets and different price elasticities of demand. The international editions come with a token warning on the cover that forbids them from being re-sold in the U.S. even though it is perfectly legal. Additionally, the shipping costs and required waiting time further compels students to avoid international editions.

Because the four conditions required for price discrimination are met, it’s no surprise that publishing companies price discriminate. Unfortunately, the students feel the pain. There is the last resort, however, of just not buying a textbook at all! Just hope to pass the class.

Link: Swelling Textbook Costs Have College Students Saying 'Pass'

Posted by: Caryl Huynh, Meghan Magennis, Chris Coyle, Lance Wang