John had several posts here and here about the high price of textbooks. He had urged me to write a response to an op-ed by Michael Granof arguing that textbooks are so expensive because of the secondhand market, and that the solution is to kill that market. I was to slow off the mark and never got around to it, but the entire thing came back to mind today when I got a copy of something called "ACUMEN" A Faculty Newsletter from something called the "Follett Higher Education Group" about current legislative proposals concerning textbook prices. It contains such gems as "When fully integrated into a course by the instructor, the value a student receives from a textbook shold always outweigh costs," (i.e. who cares about price?) and some stuff about jawboning with publishers to set lower prices.

To take these one at a time: no doubt the high cost of new textbooks reflects the active second hand market - but of course the overall prices paid by students is lower on account of cheaper used versions. It is pretty well established in economics that producers of durable goods hate competing with themselves - it is equally well established that from a welfare perspective there is nothing inefficient that results from the presence of second hand markets. That leaves the conclusion that either Granof is ignorant of basic economics, or a stooge of publishers who would surely love to get rid of the secondhand market. The "Follet" whatever urges inaction - which despite the vacuity of their arguments is probably the right action; it is hard to see how local governments regulating the textbook market is going to improve things.

That is not to say that the textbook market is perfect by any stretch of the imagination. There is an enormous agency problem since the faculty who assign the books don't pay for them, so don't care much about whether they assign cheap or expensive books. On top of this is the lucrative copyright monopoly for individual books (you knew that was coming, right?). This encourages the proliferation of nearly identical books to grab a share of the lucrative monopoly. Michele and I have written about that problem here. On top of which we have the proliferation of new editions in an effort to keep the second hand market down. The solution is as simple as it is unlikely to occur: abolish the copyright monopoly, force the producers of textbooks to compete like everyone else, and ... well the agency problem won't matter so much as students can just buy one book and copy it among themselves; we may actually get good textbooks, as authors of new textbooks won't have to start from scratch, and who knows, maybe - like the fashion industry - we will see real innovation.

Listed under "no conflict of interest here." Talk about a dedicated lobbyist.

After a brief hiatus TIIP (TECHNOLOGICAL INNOVATION AND INTELLECTUAL PROPERTY Newsletter) is back. Great postings on patent lawsuits; Ken Arrow's views of innovation; Patent peer review; international court forum shopping; and generic drugs.

Via Kal Raustiala a nice New Yorker article about innovation and copyright in the fashion industry. And now for the test: is Larry Lessig right? Does only money matter when iit comes to making law? Or do ideas count? If we see Congress push through copyright for fasion, I think we can conclude that Larry has it right.

Scientific journals serve to sell stuff they get for free to libraries at a substantial price. At one time this made sense, since paper copies of journals played an important role in communicating scientific information. Since the advent of the internet, these journals are dinosaurs, much like the music industry. Like the music industry, they are not fading quietly into the good night. Here, via James Dow, is an amusing example:

If you click here, you will find a website offering you a chance to buy a book review. The six page book review can be downloaded in exchange for $42 plus tax. If you click here you can buy the 320 page book: for $17.19. (Or, still for less than the price of the book review, they'll throw in Daron Acemoglu's latest book.)

One significant recent innovation is the introduction of health clinics into pharmacies. The article plausibly says that this is both convenient and cheap, especially for people who are poor or who don't have health insurance. Of course it represents competition for doctors (the clinics are staffed by nurse practitioners). Do I have to tell you what the president of the American Academy of Family Physicians had to say about the clinics?

[he] said the clinics have risen out of a broken health care system.

"The clinics are one response. They are not an answer."

and the AMA?

[they] passed a resolution in June asking state and federal authorities to investigate whether there was a conflict of interest in drug-store chains that both write and fill prescriptions.

The desire for monopoly springs eternal...

An earlier post by John highlights the move in Congress to extend copyright protection to the fashion industry. The mere fact that there is no problem to solve - innovation in fashion is thriving after all - appears not to be a consideration. A recent article by Kal Raustiala and Christopher Sprigman in the New Republic points out it is worse than that: the most likely effect of extending copyright protection to the fashion industry will be to kill innovation in the industry. They explain why:

By allowing the copying of attractive designs, current law fits well with the industry's basic mission--to set new fashion trends and then convince us to chase them. And the trend-driven copying of attractive designs ensures that those designs diffuse rapidly in the marketplace. This, in turn, makes the early adopters want a new style, because nothing is less attractive than seeing your carefully chosen clothes on the backs of the hoi polloi. In short, copying is the engine that drives the fashion cycle.

Schumer's bill would kill that engine.

One of the grandest attempted thefts under the guise of IP has been the effort of SCO to hijack Linux. This seems to have come to an end: Groklaw, which has been following the case intently reports that the judge in the case has ruled that SCO doesn't even own the copyrights in question.

This is also a sad tale of a lawyer gone bad. David Boies who rose to fame by making a monkey out of Microsoft as a government lawyer, and who won our sympathy for defending Napster against the RIAA seemingly turned to the dark side - taking most of SCO's money on a worthless lawsuit that seems to have been designed mostly to bilk investors.

In our book Michele and I point out how most modern IP law arose not from a problem that there was too little innovation and creation that needed to be solved, but rather that in a mature industry, aging firms no longer willing to compete in the market successfully lobbied government for protection from competition in the form of IP laws. Once again...the New York Times reports

Senator Charles E. Schumer, Democrat of New York, talked about a bill proposing to extend copyright protection to fashion that had been introduced in the Senate last week, mirroring one that has been under consideration in the House since April 2006.

As has been well documented - for example by Raustiala and Sprigman - there is both rampant piracy and rampant innovation in the fasion industry. There is no problem here for goverment to fix. There are firms that would like a monopoly so they can earn more money. Wouldn't we all like that?

You can find some further blog discussion by Sam Boyd and the invaluable Matt Yglesias.

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