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Does Competition Really Increase in the Textbook Market When it Becomes More Concentrated?

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Tuesday, 26 August 2014 04:22

A Vox piece on soaring textbook prices told readers:

"And the college textbook market has changed, too. Publishers used to spread out the cost of a new edition over five years before publishing the next edition and starting the cycle over. Since the publishing industry began consolidating in the 1980s — five major publishers now control 80 percent of the market — competition has become keener, and the window before a new edition has narrowed from five years to three. That means higher prices so that publishers can recoup the costs and make a profit."

Let's see, competition has become keener as the industry got more concentrated, causing prices to rise? That doesn't sound like the textbook economics I learned.

This sounds more like a story where an industry grew more oligopolistic. Rather than competing on price, textbook makers compete on quality (or the appearance of quality -- to keep the analogy to the prescription drug industry used in the piece). There is an implicit agreement not to try to undercut each other on price, since the big five recognize they would all end up losers in that story.

This sounds like a case where a bit of anti-trust action might do lots of good. Alternatively, a small amount of public funding for open source textbook production may wipe out the bastards altogether.

Comments (7)Add Comment
Fox News Discovers Dean Baker is Behind Socialist Textbooks Used in Public Colleges
written by Last Mover, August 26, 2014 5:10

DB reveals true inner self and ends up in another conspiracy theory on Fox News:

"First they came for the nouns and verbs but I wasn't a noun or verb and said nothing.

Then they came for the complete sentences but I wasn't a sentence and said nothing.

Then they came for the paragraphs but I wasn't a paragraph and said nothing.

Then they came for the publicly funded open source textbooks and I went ballistic and outed them as the anti-competitive bastards they are who hate free markets that actually work."

The tipoff came when a fact checker at Fox News discovered the use of the word "public" in one of the textbooks which appeared over ten times in only one single chapter discussing public roads and other forms of communism that also questioned the validity creationism.
...
written by Ed, August 26, 2014 7:21
My son just got books for 3 classes. Each book contained a "code" to access online resources. Which forced him to have to buy new books for each. $440 for 3 books. It is quite a scam.
Blame the communists
written by Ho Ho, August 26, 2014 7:46
Everybody knows that commie profs are driving up the costs of education by forcing administrators to accept ever higher salaries and hire even more administrators to delegate their work to. Now libtardic profs are insisting that publishers form a Pareto sub-optimal equilibrium just because they (the profs) want to amend their course materials incessantly and to spend even more time in textbook adoption committee meetings. Someone needs to stop these Stalinists.
Textbook purchases have no choice
written by Steve H, August 26, 2014 2:05
I'm a professor. I chose the textbooks for my courses, but I don't pay for them. The textbook industry competes very effectively for my business. They develop innovations that make my life easier (e.g. quality, easy to use online assignment systems seamlessly incorporated with the text) while raising the price paid by people other than me (i.e. students).

It would be great if a smart economist could think of incentives to encourage an efficient textbook market. In the absence of an efficient market, open-source-style texts might well be the best approach. However, in many subjects, linking the text to online assignment systems will be necessary for success, and I'm not sure who would pay for the maintenance of the web system. Given the textbook industry's incentives, efforts at public funding might face a wall of lobbying.

I don't say this to be negative - the web is creating massive changes and opportunities - I'm just wondering how best to take advantage of these opportunities.
making used books obsolete faster
written by frank, August 26, 2014 3:32
this is what happens with more frequent new editions. it's a scam to sell more books
Leaving every child behind
written by Nick Batzdorf, August 26, 2014 3:44
The bastards only control textbooks through high school, not college. But what makes it especially bad is that they have an opoly over the content of those books, not just the price.

We hear about creationists trying to force their garbage into textbooks, but the bigger problem is that all creativity is being removed from education.
Open Access, not Open Source
written by Melissa, August 27, 2014 10:35
Just a minor detail, but when talking about texts under copyright, and freely available such, the term is "open access". The term "open source" refers to software, because "source" refers to "source code", the programming language text that programs are written in (eg C++, Java, etc.).

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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