Textbook Prices

In Sticker shock, Henry at Crooked Timber re-initiates a popular blog discussion topic, dealing with the prices of college textbooks.

Other blogs responding include :

Alex at Marginal Revolution,

Mark at The Liberal Order ,

Evan at Coffee Grounds and

Tim at Oregon Commentator Online .

I found that all of these discussions and their comments were generally valid, and will simply encourage you to read them for yourself, and not comment on them directly.

My point of responding is to note that the problem can be approached at a higher economic level as follows :

As opposed to a best-selling hardcover novel, a college textbook need not necessarily be considered as a stand-alone consumption good. Rather, it may have the economic characteristics of a factor of production for the broader consumption good of a 'college education.'

In a sufficiently competitive free market, production factors tend to earn their Marginal Value Product (or Marginal Revenue Product). It is therefore not surprising that the price of textbooks tends to track the high and rising price of a college education.

To make this plainer, imagine that all new textbooks are sold with a dust jacket and that every college course requires that all of the dust jackets of the required books be turned in with the final exam if course credit is to be allowed. Assuming no counterfeit dust jackets and the destruction of the dust jackets that are turned in, then it should be clear that the dust jackets alone will be highly valued because of their importance to an actual college degree.

The same kind of consideration may be involved with prescription drugs, to the extent that they act like factors of production for the highly valued general consumer good of 'good health.'

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I hadn't considered the

I hadn't considered the factor-price angle, but I think it's certainly an interesting one.

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Although factor inputs are

Although factor inputs are priced at their marginal revenue product, remember the linkage to marginal cost. Each factor input (chosen for the production mix, against potential substitutes) is utilized in increasing quantity until its marginal revenue product equates to its marginal cost.

Doesn't this break down, as applied to intellectual property like textbooks, which have a marginal cost of zero (after minimal production costs)?

And what exactly is the marginal revenue product of one more of a particular, already consumed textbook, in terms of a student's education?