A textbook example of free markets

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When most of us hear the word “underground market,” we think of drugs or stolen goods. You would never expect the basis for a peer-to-peer alternative market to be textbooks.

From 1986 to 2004, textbook prices have increased by 189 percent, according to a study conducted by the Government Accountability Office. The market was formed out of necessity in response to the largely avoidable absurd textbook prices.

So why does my finance textbook cost nearly $200?

By manipulating the market in ways that seem unethical, universities, professors and book publishers everywhere are making some serious bank off otherwise unsuspecting college students. If I had actually purchased my required textbooks this semester through our university bookstore, I would have shelled out over $400 for four classes. I did not purchase these ‘required’ books because of their exorbitant sticker prices.

The current textbook market does not resemble the free markets of other good and service selling. Instead of different publishers and authors competing for customers and thus lowering prices, the textbook market somewhat resembles the market for healthcare.

An article published by the think tank, The Manhattan Institute, offers an analysis of what is occurring: “One entity (the physician/the professor) desires – that is, assigns or prescribes – the product, a second entity (the patient/the student) consumes it, and a third set of entities (insurance companies/parents) foot the bill. Spiraling prices for textbooks, like spiraling medical costs, seem to be the inevitable result.”

Students are coerced into buying the book in fear of doing poorly in the class, which removes any competition or mechanism that might otherwise force prices down. A professor will often require a book that they had some part in authoring, and since the students are required to have the book, the publisher and the bookstore have no incentive to charge a low price.

But there is hope.

Free markets can ease the pain of buying and selling textbooks. The Facebook pages ‘WSU Students Buying/Selling Textbooks’ and ‘WSU Book Swap’ are free market exchanges where students can buy and sell textbooks at market equilibrium.

The two groups are comprised of students at WSU who sell their textbooks to each other rather than going through the rip-off bookstore.

However, textbook publishers and authors have found a way to prevent students from utilizing the free market solution.  By bundling their books with pointless homework software and constantly releasing new editions that only have slightly reworded questions, the publishers and authors can then artificially force all students to buy the brand-new edition at a premium price.

Until a new system is implemented for textbook markets, prices will likely continue to increase for the foreseeable future.

-Mitch Strang is a senior finance major from Bellevue. He can be contacted at 335-2290 or by [email protected] The opinions expressed in this Column are not necessarily those of the staff of The Daily Evergreen or those of Student Publications.