Amazon's US textbook ripoff?

Are US students being ripped off by Amazon.com? Jonathan Dingel at Trade Diversion blog points to a forthcoming paper by Yale's Christos Cabolis and colleagues, A Textbook Example of International Price Discrimination (PDF). The paper finds that although books for general audiences are similarly priced internationally, "textbooks are substantially more expensive in the United States" (on amazon.com) than the UK (amazon.co.uk). They argue that "cost factors cannot explain this phenomenon and discuss several demand-side explanations."

Dingel, meanwhile, provides a comparison of prices for economics and statistics textbooks in the US and UK that appears to confirm those findings:

I've found a number of cases where American customers can save money by purchasing their textbooks from amazon.co.uk and paying for international shipping (£6.98) rather than using amazon.com. Check it out:

                                                                                                                                                     

Title	Authors	.com	.co.uk	$ diff	% diff
Mathematics for Economists	Simon & Blume	126.74	84.69	42.05	33
Advanced Macroeconomics	Romer	56.25	83.56	-27.31	-49
Econometric Analysis of Cross Section and   Panel Data	Wooldridge	80	89.98	-9.98	-12
Economics for Business	Sloman	95	73.39	21.61	23
Mathematics for Economics and Business	Jacques	115	75.84	39.16	34
Options, Futures and Other Derivatives	Hull	158.99	88.45	70.54	44
Statistics for Business and Economics	Newbold et al.	153.33	91.84	61.49	40
Introductory Econometrics for Finance	Brooks	35.5	61.17	-25.67	-72
Statistics for Economics, Accounting and   Business Studies	Barrow	100	75.84	24.16	24
Microeconomics: Principles and Analysis	Cowell	78.35	79.32	-0.97	-1

Prices reported in USD with an exchange rate of 1.88 USD per GBP.

Comments

[happyjuggler0]

Well, prices are set based on what the market will bear, costs aren't supposed to be a factor in price except for high cost producers.

With international arbitrage a factor, one could guess that the "average" consumer in the UK is much more likely via habit to look for international arbitrage opportunities than an American would be. Thus a seller of texbooks could set different prices in the UK and the US based on what the local market would bear, and so long as the US price were higher "they" could get away with it.

Or it could be that the right hand at Amazon doesn't know what the left hand is doing. :o

Of course if the blogging community spreads the word and those on campuses hear about this, then there would be a greater tendency towards one price.

[Bryce S]

As an American College student myself, I feel obliged to give my rationale for our higher priced textbooks. The greatest reason is that students rely heavily on textbooks to supplement lectures (or in some cases, to supplant lectures entirely) and they are often directed to the college's bookstore to purchase these books. By purchasing through the bookstore, students are given a few weeks to decide if they need the book as well as providing a resale market for the student after the course is completed.

I have purchased the international edition of many books, and the biggest physical difference is that international books are soft-cover rather than hard-cover. They also contain large block lettering that states "NOT FOR RESALE IN AMERICA" and although I question its impact, copyright issues come into play.

Paying more for American textbooks comes down to a simple cost-benefit analysis. For certain courses, I would prefer to pay an additional 30 percent for the benefit of knowing that I can return the book for a full refund during the grace period as well as factoring in the amount I will receive for selling the book back to the store at the end of the semester.

I'd be interested to see the differences in prices if you account for students selling their books afterwards. I'd guess that it would still be cheaper to buy the international copy, but that requires more work and as I can attest, most college students prefer the convenient albiet pricier choice rather than a purely economical one.

[PJ]

It's basic price discrimination, just like we teach about in principles of microeconomics. Airlines charge more for last minute business class seats, if I want a new car with a "limited edition" gold logo on the side instead of a plain old silver logo I will pay more for the same car, if I eat in a restaurant with nice decor and a classy name I pay more for the same food. It's all about filtering customers and charging higher willingness to pay buyers more and thereby capturing more of the consumer surplus. Etc etc. There is nothing unusual or unethical about this.

Ah, but why are US students willing to pay more? That is the interesting question.

[Tom]

Prices for items such as text books are likely to be sticky. Is much of the difference due to the exchange rate of 1.88? Use an historical exchange rate over say the last 5 years and the discrepancies don't look so large.

[Arthur Eckart]

I'm surprised U.K. students can choose from several textbooks for each class. In the U.S., there's typically one required text and it would be difficult to pass without it. That may explain why U.S. students pay more. Also, there may be imperfect information, since U.S. students don't know they can buy textbooks cheaper through other countries. I find it interesting the paper makes the statement that higher priced U.S. textbooks run counter to conventional wisdom that consumer goods are cheaper in the U.S. than in Europe, since it's based on one example.

I agree copyright laws may not make much of a difference. I knew a foreign student, in the U.S., who would buy a textbook for $100, copy it for $20, which may have taken him 90 minutes, and then return the book for a full refund. I guess, he could have run a business selling copies for $50 and making $20 an hour.

U.S. students face monopoly power from publishers and monopsony power from book stores. Sometimes, there may be two book stores that buy back textbooks, which is an oligopsony, although they still have monopsony power. The books are often bought back at much lower prices and resold at much higher prices.

[Lafayette]

AE: "I find it interesting the paper makes the statement that higher priced U.S. textbooks run counter to conventional wisdom that consumer goods are cheaper in the U.S. than in Europe,"

Even more interesting is the fact that the dollar has gone from 0.85$ per Euro to 1.30$ to 1.20$ in the past half decade ...

These books are printed where ... in the US? So, why not expect them to be cheaper in Europe?

It is true that prices for certain products have leveled out, with the sole exception to the UK. (There still is maintained this silly exchange of 1£ per 1$, when observing product pricing in general and particularly of gadgets, that has existed since the 70s. I can't imagine where that notion comes from, but it is consistent.)

In general, I suspect that the cost of living in Europe is cheaper than stateside (aside from housing, which is highly variable), but the price Europe has paid for this depreciation of costs has been horrendous ... stupidly horrendous. An unemployment rate hovering between 7 and 11%, depending, for the past quarter of century? Entire generations on the dole in some countries. Something had to give, and the standard of living was that something.

[Dave]

Brits (or at least those too dull to shop online) pay 60% more for CD's. So it's only fair that US students should pay nore for textbooks. I'd guess that still gives US shoppeers the advantage - quite rightly if you're not so dumb as to pay $25 for 50 minutes of music.

Seriously, though, it's certainly the case that US customers generally pay less. Books are slightly exceptional in being tax-free in the UK - in Continental Europe they tend to be far pricier in relation to other goods. So it's a rare occasion when buying British may make sense - though used books are far cheaper Stateside, and only the shipping cost stops us Brits buying everything you have.

[Dave]

'Scuse spelling, I was in lighthearted mood!

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Students at the University of Colorado at Boulder are trying to make it easier for Students to sell their books for good prices without the effort.

stusbooks.org
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