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Greg Mankiw has published an essay “Reflections of a Textbook Author”.
Prof. Mankiw estimates ~4mm copies of his books are in print.
Of interest to investors, he asks “Are textbooks too expensive?”
He is skeptical:
High fixed costs
Financial struggles of major...
Prof. Mankiw estimates ~4mm copies of his books are in print.
Of interest to investors, he asks “Are textbooks too expensive?”
He is skeptical:
High fixed costs
Financial struggles of major...
(2/n)
...publishers, citing bankruptcy of Cengage and stock price of Pearson.
Lack of competitive entry into the industry.
On the principal-agent problem of Professor & student: doesn’t explain the *change* of prices.
...publishers, citing bankruptcy of Cengage and stock price of Pearson.
Lack of competitive entry into the industry.
On the principal-agent problem of Professor & student: doesn’t explain the *change* of prices.
(3/n)
Hypothesis: Prices not as high as they appear due to lower-cost substitute products from publishers: splits, loose-leaf, e-books. Doesn’t mention book rental, but this is also a factor.
Data: the $250 hardcover edition accounts for only 5% of units & 8% of revenue.
Hypothesis: Prices not as high as they appear due to lower-cost substitute products from publishers: splits, loose-leaf, e-books. Doesn’t mention book rental, but this is also a factor.
Data: the $250 hardcover edition accounts for only 5% of units & 8% of revenue.
(4/n). The 2018 average wholesale price was $102.
Also: inflation overstated because digital technology makes “books” better for teachers & students: animation, video, instantly graded problem sets, etc.
Remember hedonic adjustments?
The problem...
Also: inflation overstated because digital technology makes “books” better for teachers & students: animation, video, instantly graded problem sets, etc.
Remember hedonic adjustments?
The problem...
(5/n) ...just like other high fixed cost areas such as software, movies, video games, etc. is who should pay for these costs?
One final piece which is not from the essay, but perhaps indicative are the list prices of the Intro Mankiw book...
One final piece which is not from the essay, but perhaps indicative are the list prices of the Intro Mankiw book...
(6/6)
5th Edition - 2009 - List Price $275
6th Edition - 2012 - List Price $350
7th Edition - 2014 - List Price $375
8th Edition - 2017 - List Price $250
Here is the essay:
gregmankiw.blogspot.com/2019/03/reflec…
5th Edition - 2009 - List Price $275
6th Edition - 2012 - List Price $350
7th Edition - 2014 - List Price $375
8th Edition - 2017 - List Price $250
Here is the essay:
gregmankiw.blogspot.com/2019/03/reflec…
