The Market for Textbooks
As college students, we all know the importance of our textbooks. In the market for textbooks, the college students buy books required for classes and the sellers are the publishers, production companies, second-hand booksellers, and student who no longer need their old textbooks. Books on the same subject function as perfect substitutes, at least for us as long as they are usable.
At the beginning of each semester, there are students rushing to the Odyssey Bookstore for their textbooks and they are forced to pay the, very high, market price. In addition, towards the end of the semester, we end up with books stored under our beds, such as “Intermediate Microeconomics.” Some of the students want to sell their books for some pocket money, or just to have space under their bed for next semester’s books. However, they do not receive a profit when selling them back to the Odyssey or to the publishers because they sell them at the new market price, which is lower than what they originally paid for them. Some tech savvy students choose to re-sell their books online, where they have a little more control on the price they can demand. But why is it we get ourselves in such a situation? Why do the prices of our books fluctuate so much when we buy and sell? Of course there are some students, armed with their Microeconomic theory knowledge and insight that take advantage of the situation and make a profit out of it, but what about the others?
In this blog, we are going to look into two periods of an academic year: the end of the fall semester and the beginning of the spring semester. Because students no longer want to hold on to their books because they have completed their courses for fall semester, they become sellers in the market by selling their books, increasing the market supply of text books and sell their books into the market, increasing the market supply of books. As shown in the graph, the supply curve will shift right, and causing the equilibrium to also shift.
Then after winter break, students come back with a new demand for textbooks. The students will flood into the market for textbook with a new list of textbooks for their new set of courses. The students then the students are now the buyers of new textbooks at any given price. This increase in buyers causes the demand curve to shift right, therefore, creating a new equilibrium. This new equilibrium increases the price from P2 to P3 and the quantity of equilibrium increases again.
But what happens in between semesters? Although the prices of the books at the beginning of a semester are not necessarily higher than they were in the beginning of the previous semester, the demand and supply are relatively constant and lower than the two periods we mentioned above, which will give the buyers a lower price during the interim. To save money, it might be wise to buy the books you need for the next semester at the end of this semester. This way, you are taking advantage of the increasing supply, and the lower prices. With the same logic, you can sell your books when students look for new textbooks at the beginning of each semester which will possibly save you some money allow you to gain the full price you paid for the books the previous semester.
However, due to the increase in modern technology, the market is evolving. Students have more options as to how to acquire their textbooks for their courses. For example, the emergence of e-books, kindle versions, Ebay, Amazon, and online downloads are so much easier to get. The market is no longer the same as before when we could only buy books from publishers at the price they set up and this shows the influence of technology development of the demand and supply.
No comments:
Post a Comment