1. That part of the reason for retaining the law on parallel importing was that local book providers already face competition from imported books.  If this is the case there must indeed be significant cost savings in buying books in global markets rather than purchasing them locally.  This runs counter to claims that the price savings in allowing parallel imports are low. If they were low local publishers would have little to fear anyway.

2. If Australia seeks to support local authors – I don’t reject this –  then give them a subsidy not penalise all consumers with higher prices.  Local authors don’t like this because their dependence on goverrnment handouts becomes explicit but such subsidies are less restrictive than partial prohibitive tariffs on trade and provide comprehensive protection for Australian authors even in the face of online purchases. 

It is just so important for people to learn some basic economics.  Governments can get away with this interest group-driven stupidity that inflicts net costs on society as a whole only because not enough people understand some basic logic about markets.

Update: Useful comments by Joshua Gans and a critique by Sinclair Davidson.

I have been searching for microeconomics texts available on Kindle that might save my students some money but they all seem to be in the $60-$90US range.  Not a good deal unless there is a convenience advantage in using Kindle. I’d be interested in the experiences of others.

* I have loaded a couple of novels onto my iphone but find reading from it a trial.  Too small and hence difficult to read.

In the main the possible change of heart reflects a campaign by local book printers and publishers.

There are gains to local consumers from the price cut but the argument is that lower incomes to local authors and to local publishing houses would lead to a reduction in the supply of locally-sourced reading material.   Books by overseas authors, it is claimed, would come to further dominate the local market.

The view propounded is consistent with arguments for forcing local content in TV programming.

My preference is to allow free competition in such markets and to move towards free trade immediately but I acknowledge that there is a case for some nationalistic bias. It is desirable to promote Australian content in books and in media, such as movies and TV shows, as an alternative to car chases, serial killer movies and what seems to be a bottomless pit in contemporary US culture.    There is also direct value in promoting the Australian national viewpoint – not only in cultural and entertainment areas but also in the way we teach.  We need to self-reflect as a society and to learn about ourselves.

But the ban on parallel imports is not an effective way of achieving this.  The best way to advance Australian-sourced literature is through subsidies administered by organizations such as the Australia Council for the Arts .  This provides transparent grants to local authors and such grant givers can be held to public account.  That is not to say such grant-giving will always get it right but on balance it should promote work of quality and not a bunch of talentless free-loaders.

Banning parallel book imports increases returns to local printers and publishers by charging a high price to local consumers for locally-produced books.  This price effect reduces local consumption of such material.   

To the extent too that such publishers have monopoly power and the market for local book writing is competitive such high prices need not translate into increased incomes for authors.

Promoting Australian culture is also not only a matter of trade economics but also involves educational philosophies and more general issues of national self-confidence.  I’ll post about such issues on another occasion when I have time to disentangle this case from an uncritical jingoism.

Incidentally I am also annoyed by claims that professors could not care less about the cost of texts because they do not pay the costs – this is untrue. This professor at least does exercise concern. Many students work part-time in relatively low paid positions and a bill of $500 per semester for texts is a real burden. In addition it is often an unnecessary burden given that many undergraduate course materials are fairly standard and could in principle be supplied online at zero cost. Many course materials and course guides are provided online in any event.

As a general issue consumers are better-off if they can be offered cheaper goods and services – and with respect to textbook provision they can be.

In microeconomics where I teach there are dozens of texts on the market which cover more-or-less the same content and many of which are updated every year or so with new editions and new paginations designed to ‘kill off’ the second-hand market. While some of these Australian versions of US texts are good many offer product differentiation only in treating an unnecessarily large range of topics. They do not teach core material better. Many are appallingly proof-read and poor value for money – in my view the authors should not claim publication credit for participating in commercial scams. We would all be better off if fewer high quality texts were written.

Of course the strategies of the textbook vendors in pricing high but in killing off the second hand market reduce the value of buying a textbook. Whereas almost all undergraduates bought all recommended texts 20 years ago my contacts in the University Cooperative Bookshops tell me the figure has fallen to about 50% today. Why buy an incredibly expensive text that will have low resale value because suppliers can be anticipated to intervene to ‘kill off’ the second-hand market?

Greg Mankiw asks the question why don’t critics of excessive textbook pricing provide texts competitive with those claimed to be over-priced? It is a fair question. My guess is that the use of ‘big name’ US professors in an Australian market where the cultural cringe is alive and well, provides a strong barrier to entry of perhaps equally competitive locally-produced texts. Reflecting the strength of cultural cringe factors academics at one large university I know advise their best graduate students not to pursue their PhD in Australia. Too many Australian academics buy what is obviously just self-interested deceit.

With respect to book publication there are substantial fixed costs that need to be incurred in marketing new textbooks. Large firms with established distribution and marketing efforts can impose big entry barriers here.

How to defeat this manipulation? One immediately pragmatic response if you do use texts authored by our US ‘betters’ is to issue reading lists which include references to past as well as current editions so that ‘killing off’ the second-hand market works less effectively. Another response is to not discourage students in their development of creative skills with photocopying machines. Instructors should be careful with your words here or the greedy publishing houses will be on your back with legal actions – a text of 500 pages could be photocopied at the University of Melbourne library for about $30 (12 cents per page) although this would violate copyright law. Photocopying short sections of texts that are provided in the Reserve sections of libraries is legal and should be encouraged as a substitute for complete texts.

Probably the best solution of all is to use online material as texts and to encourage reading of reference texts in the library. A few texts have been placed online for free and this is definitely the way of the future. Greedy publishing houses who charge monopoly prices for overrated, poorly-written US-style textbooks that have limited resale value are creating incentives for their own destruction.