So you’ve gotten accepted to a good school, managed to scrape together the funds to cover tuition, room and board, and life is looking pretty good. You register for a slew of interesting classes, and are excited about embarking on a new learning experience. Then you see the price of your assigned textbooks, and your jaw drops.
The cost of textbooks has been rapidly rising for years, often running into the range of hundreds of dollars for a single book. The obvious question is, what is so special about textbooks? How are publishers able to charge so much for information that is largely available in mass market paperbacks and online?
To begin with, there are only five major publishers of textbooks in the United States, and they have little incentive to compete with one another. The demand for their products is not determined by the direct consumers – the students – but instead by the professors who assign a required text. If a publisher can convince the academic community that theirs is the best reference on the subject, professors will assign it and students will have to buy it. Price is not a factor in the professor’s decision, and so the publishers do not have to compete along that dimension. This results in one of the very rare real world cases in which the price elasticity of demand is nearly zero.
The other problem has been a lack of substitutes. Students have to use the book they are assigned if they expect to keep up in the class. Publishers routinely come out with new editions, being careful to alter page numbers so that older editions will be less useful as a substitute reference. This limits students’ ability to buy used copies of the book or simply use a library copy.
Thankfully for students, it appears that this situation is beginning to change, and once again technology is the instrument of their deliverance. The freedom of information, along with the ease of coordination, that comes from the internet has opened up new alternative to shelling out for pricey textbooks. Sites like Half.com and the used book section of Amazon allow students to find textbooks for a fraction of the price. The speed with which someone can resell a no longer useful text is enough even to outpace new the new editions constantly being churned out by publishers.
Professors are also starting to appreciate the costs involved. Recognizing that increasing numbers of students are simply not buying the required materials due to cost, many have taken to distributing PDF versions of selected material. The fair use provision in copyright law allows small samples of text to be provided for educational use, but the internet in general is starting to change the way people think about intellectual property. The ease of uploading content and the difficulty of firms policing the entire internet means that it is easier than ever for students to access the required materials for free. As e-books begin to supplant physical ones, it will be even harder for textbook publishers to maintain the high prices they have been commanding for so long.
While textbook publishers are free to charge what they like, up to this point they have been shielded from the normal mechanism of supply and demand by buyers who do not bear the costs of their purchases. Combined with the intellectual property protections these firms enjoy, the result was an environment that was decidedly disadvantageous to students.
Now, thanks to technology, consumers and professors alike are wising up and finding better, more efficient ways to manage their educations, without resorting to antitrust laws, a mass of unjust, contradictory rules that libertarians have long opposed. The shift away from traditional textbooks in favor of cheaper alternatives shows in bright colors how, when barriers to the free flow of information are removed, everybody benefits.