John had several posts here and here about the high price of textbooks. He had urged me to write a response to an op-ed by Michael Granof arguing that textbooks are so expensive because of the secondhand market, and that the solution is to kill that market. I was to slow off the mark and never got around to it, but the entire thing came back to mind today when I got a copy of something called "ACUMEN" A Faculty Newsletter from something called the "Follett Higher Education Group" about current legislative proposals concerning textbook prices. It contains such gems as "When fully integrated into a course by the instructor, the value a student receives from a textbook shold always outweigh costs," (i.e. who cares about price?) and some stuff about jawboning with publishers to set lower prices.

To take these one at a time: no doubt the high cost of new textbooks reflects the active second hand market - but of course the overall prices paid by students is lower on account of cheaper used versions. It is pretty well established in economics that producers of durable goods hate competing with themselves - it is equally well established that from a welfare perspective there is nothing inefficient that results from the presence of second hand markets. That leaves the conclusion that either Granof is ignorant of basic economics, or a stooge of publishers who would surely love to get rid of the secondhand market. The "Follet" whatever urges inaction - which despite the vacuity of their arguments is probably the right action; it is hard to see how local governments regulating the textbook market is going to improve things.

That is not to say that the textbook market is perfect by any stretch of the imagination. There is an enormous agency problem since the faculty who assign the books don't pay for them, so don't care much about whether they assign cheap or expensive books. On top of this is the lucrative copyright monopoly for individual books (you knew that was coming, right?). This encourages the proliferation of nearly identical books to grab a share of the lucrative monopoly. Michele and I have written about that problem here. On top of which we have the proliferation of new editions in an effort to keep the second hand market down. The solution is as simple as it is unlikely to occur: abolish the copyright monopoly, force the producers of textbooks to compete like everyone else, and ... well the agency problem won't matter so much as students can just buy one book and copy it among themselves; we may actually get good textbooks, as authors of new textbooks won't have to start from scratch, and who knows, maybe - like the fashion industry - we will see real innovation.

Or maybe the solution is for us professors to assign readings from books like the one that David and Michele have written which are freely available online.