Hardcover Price Discrimination

As an ardent book lover, I spend a good deal of my free time roaming around bookstores. As a kid with a propensity to finish a book a day, and who planned out book releases a year in advance, the prices of new books was interesting to me. Since attending some economics classes and learning a bit about how prices are set, it has often struck me walking into bookshops how cleverly prices are set in this market. Consumers wishing to purchase a new, hardcover book will pay up to twice as much for it as would consumers willing to wait a year for the same book to be released in a softcover. Obviously it does not cost the publishing company twice as much to produce the hardcover book. While the book would become cheaper to manufacture as the printing went on due to economies of scale, that is not the primary force at play here. What they are doing in this instance is engaging in second-degree price discrimination. Consumers voluntarily segregate themselves into two categories: those who care a great deal about reading the book as soon as possible, and those who are just merely interested, but are not willing to pay top dollar. Then the publisher can charge those two groups different prices for largely the same product. They get to charge the hardcore fanatic more, without driving away the casually interested.

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