Revision Cycles For Economics Textbooks: An Application of the Theory of Durable Goods Monopoly
In this dissertation, I study economics textbook markets as an example of durable goods monopoly. Textbooks are protected by copyrights, and from a student's point of view, different textbooks are not good substitutes because students wish to use the textbook adopted by their instructors. Therefore sellers have market power. Textbooks can be reused, and are therefore at least somewhat durable. Traditionally textbooks have been sold; for a variety of reasons a rental-only policy seems to have been impractical. An implication is that the existence of resale markets will lower the profit potential for textbook producers. If renting is not feasible, one way to limit the durable goods monopoly problem for sellers is to strategically reduce the durability of the goods. Planned obsolescence limits the amount of previously produced output available to compete with current output. In the case of textbooks, planned obsolescence can take the form of strategically shortened revision cycles. In recent years, an important innovation, production of digital e-books, has impacted publishing. The e-book innovation can provide publishers with an improved opportunity to rent books, rather than sell them. Access to e-books can easily be sold with expiration dates, implying that the content is rented. As e-book sales become increasingly important, then the need to strategically reduce durability through short revision cycles should be reduced. That is a key hypothesis investigated in this dissertation. The first chapter of this dissertation will review the literature on durable goods monopoly, emphasizing contributions that are especially applicable to textbook markets. In the second chapter, I will empirically model textbook revision decisions. Using data from PubTrack Higher Education that describes sales and revision data for a variety of economics textbooks from 1996 to 2008, I look for evidence of changing revision cycles related to the introduction and spread of e-book editions. To do so, I estimate a proportional hazards model to explain revision choices. Preliminary evidence shows that, other things held equal, probability of revision decreases in the period since e-books were introduced. My third chapter will investigates the robustness of the second chapter results by examining how revision cycles differ across texts in particular subfields of economics. For example, revisions of macroeconomics texts may be driven by the need to update data frequently, while microeconomic theory books are not. One might then expect that the e-book innovation would produce a greater impact (lengthening the cycle) for microeconomics than macroeconomics.
Economics, Social and Behavioral Sciences, digital textbook, durable goods, planned obsolescence, renting vs. selling, textbook market
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