On average, an undergraduate student will spend $1200 annually on textbooks.
I have become quite thrifty with my textbook shopping over the years. I ask friends if I can buy their old books, I check with the local libraries, and I scour the internet for deals. This year, I even waited to buy my textbooks until specific homework problems were assigned out of them, hoping I could skim by without the professor noticing- a tactic I do not recommend.
Even after all of this, I still end up spending hundreds of dollars every semester on books. What makes textbook prices be so incredibly high?
In a perfectly competitive market, the invisible hand ensures that the prices of goods don’t get too high or too low. Both consumers and producers will find themselves at equilibrium as they are both acting in their best interest.
What makes the market for textbooks different? How are publishers able to sell textbooks at such a high price without going out of business?
Well, to be honest, the textbook market is not a perfectly competitive market. According to The Huffington Post, just 5 publishers control more than 80% of the textbook market. This means that they hold a loose monopoly above competitors that may try to enter the market.
On the other side of things, the consumers are at a huge disadvantage. Although there are millions of students in the market for textbooks, they can’t shop around to find deals. They are forced to purchase whatever book their professor assigns. Without options, students are dubbed “captive consumers” and are quickly taken advantage of by the oh-so-powerful publishers.
Because of this, the market for textbooks is effectively broken.
Thinking about renting or buying used to save money? The publishers are one step ahead of you. By releasing new additions every few years, they are able to continue selling copies at top shelf prices even if the content of the textbooks hardly changes at all. Some textbooks offer supplementary webpages for a more interactive experience. These webpages are also conveniently accessible only by purchasing a one-time-use code marked at the same price as a new textbook.
So what do we do now? The only hope in fixing this broken market in education is to begin inflicting policies or regulations on the existing publishers. Otherwise, we need to devise a new market that challenges the traditional deadlock. Keep your eyes open for emerging open-license companies!