An amazing post by an amazing blog and its team of bloggers.
Francis Woolley says econ authors bring new editions to kill second hand market.
Publishers produce new editions of undergraduate textbooks every three years for one reason: to kill the second hand market.
The Carleton bookstore is charging $134.50 for a used version of Browning and Zupan (11th edition), $179.25 for a new one. Prices on Amazon are only slightly lower. Prices at this level are only sustainable if there is a relatively small number of used texts available – if there were 10 or 20 years worth of used textbooks on the market, the increased supply would drive down the price of both old and new texts.
Now there are 10 year old copies of Browning’s Microeconomics available – a 2001 version sells for $1 plus shipping and handling through abebooks.com. The reason that there is such a huge price disparity between old and new editions – although the books have substantively similar content – is network externalities.
However, students are always forced to buy the latest ediitons. Why?
Textbooks serve a coordination function; they allow students and professors to be “on the same page”, both metaphorically and literally.
Professors generallly assign readings by chapter, for example, “Week 2: chapter 4, consumer theory.” But chapter 3 in the current edition might be chapter 2 or chapter 4 in the old edition. Professors often require students to complete end-of-chapter problems, and problem numbering or wording may differ across editions. When a professor says “Study Figure 3.4 carefully, I’ll be asking a question about it in the final exam”, the student with an older edition of the text, where Figure 3.4 is labelled 2.4, may end up studying the wrong thing.
It’s just like software upgrades – an old version of Microsoft Word might do everything the user needs, but if Microsoft introduces a new .docx file format, old versions are rendered useless, because they are unable to read files generated by other users.
Amazing application of core econ ideas into reading textbooks…
In the process they make this whole economics of econ text-books inefficient:
The whole process disgusts me. New editions destroy value, by making old editions worth less. They hurt students, who face high prices for texts. Any pedagogical benefit from having a slightly more updated text is more than offset by the increase in the number of students who decide to save money by reading Wikipedia instead of a textbook. Ultimately, it is a collosal waste of resources – all the effort that goes into producing a new edition that differs little from the old one; all of the perfectly good older textbooks that end in the recycling bin.
But what is the alternative? One possibility is banning new editions – or limiting publishers to one every six years.
Alternatively, professors could force publishers to compete on price by giving their students a choice of texts (e.g. Readings – pp. x-y, Varian OR pp. y-z, Eaton OR pp. a-b, Browning). The obstacle this solution faces is that professors like to rely on publishers’ add-ons, for example, end-of-chapter questions, and it’s impossible to require students to complete end-of-chapter questions if every student has a different textbook. Coordinating with students when every one has a different textbook is difficult.