Textbook Example

If you have exclusive control of a product or resource in high demand, you can extract a monopoly rent from your customers. This is good for you, since you get rich, but generally less good for the economy, since it then produces less than it otherwise might. College textbooks are something of a textbook example.

A naive observer might find it peculiar that a college textbook in elementary physics, which differs only minimally from its predecessors of twenty or even fifty years ago, should retail for $230.00, while an only slightly shorter and far more original string theory textbook/monograph sells for one third of that or less. Another oddity is that textbooks, even textbooks in subjects that are changing at the pace of continental drift, get new editions every couple or three years.

These things happen because profs have students over a barrel - it can be hard or impossible to do a course without the textbook(s). If the prof isn't using his own book, what's his incentive? Well first, there's a disincentive - he doesn't have to pay for his own books. Second, publishers ply them with free books, drugs, and hookers.

OK, I'm not sure about the hos and blow, but there are the books, and if you are teaching one of those 2000 student freshman lectures with a 2 c-note text, you do have some leverage.

Some NYT commentary is here.