I recently read from Ashutosh's blog that how he bought a not-so original copy of Freakanomics from India (for Rs. 40, list price ~Rs.500) and got it autographed by the author Mr. Levitt himself. He also argues how these books (published originally) in the US are quite overpriced for any normal Indian reader.
I agree, and problem is that there is no economics behind pricing of US published books in India. Most sellers (so called legal), fix the Indian price of US published books by multiplying the US$ price with the exchange rate. This does not take into account Purchasing Power Parity (PPP).
The only exception is when they publish Indian version of the book. The other notable exception is the Economist magazine, which ensures that its price, across countries is adjusted for PPP.
While the Economist is sold at 6$ in the US, in India it costs only Rs.100. We can assume that Economist knows what its doing (well, they came up with the Big Mac Index). So, using their prices a rough index can be calculated:
= 100/(6*44) = 0.37
In other words, ideally, taking into account PPP, Freakanomics should be priced at (0.37) *(US$ price)*(the INR exchange rate)
= 0.37*9.00*44 = Rs. 146
(9$ is the lowest price I found on Amazon for a new paperback)
Ashutosh must have done some haggling to reduce the price, before bringing it down to Rs.40. Of course, It does not take into account the margins for the publisher and the author. My argument is that even if those are taken into account, the book should be priced at Rs.146 and not Rs. 500. Obviously, the market participants ensure that such demand supply discrepancies are exploited for profits (obviously there are far more buyers at Rs.146 than at Rs.500).
Actually, it will be great if the book publishers and retailers dont realize this, and keep the prices high. Imagine the number of livelihoods created by people selling books in platforms across the country.
So, Mr Levitt of all the people should not be concerned about fake. Its simple economics and even a little bit of Freakanomics.
I agree, and problem is that there is no economics behind pricing of US published books in India. Most sellers (so called legal), fix the Indian price of US published books by multiplying the US$ price with the exchange rate. This does not take into account Purchasing Power Parity (PPP).
The only exception is when they publish Indian version of the book. The other notable exception is the Economist magazine, which ensures that its price, across countries is adjusted for PPP.
While the Economist is sold at 6$ in the US, in India it costs only Rs.100. We can assume that Economist knows what its doing (well, they came up with the Big Mac Index). So, using their prices a rough index can be calculated:
= 100/(6*44) = 0.37
In other words, ideally, taking into account PPP, Freakanomics should be priced at (0.37) *(US$ price)*(the INR exchange rate)
= 0.37*9.00*44 = Rs. 146
(9$ is the lowest price I found on Amazon for a new paperback)
Ashutosh must have done some haggling to reduce the price, before bringing it down to Rs.40. Of course, It does not take into account the margins for the publisher and the author. My argument is that even if those are taken into account, the book should be priced at Rs.146 and not Rs. 500. Obviously, the market participants ensure that such demand supply discrepancies are exploited for profits (obviously there are far more buyers at Rs.146 than at Rs.500).
Actually, it will be great if the book publishers and retailers dont realize this, and keep the prices high. Imagine the number of livelihoods created by people selling books in platforms across the country.
So, Mr Levitt of all the people should not be concerned about fake. Its simple economics and even a little bit of Freakanomics.
11 comments:
Very nice post :)
Jus out of curiosty.. Ur profesion is anyway related to economics? finance???
check this link advocated by tim harford
http://www.ft.com/cms/s/323d1734-43b6-11db-8965-0000779e2340.html
I am in suport of pirated books...makes economic sense especially given the probability of u actually getting caught... :)
How I wish you were the CEO of a publishing company.Its a dream come true for bibliomanics like me!!.Why not the same thing for Magazines, DVD's etc etc
Santhosh, you have missed the point completely. There is a sound reason behind the absurdly exorbidant prices of books in India. Just imagine what would happen if Freakanomics was priced at 146. I am sure that would transalate in to at least a million copies more. That would imply :
1. 10000 More trees killed
2. 3000- Intellectual 'Know-It -Alls' created
3. a million pointless arguments
4. atleast 5 ridiculous Tv Shows on how readership of books is increasing
5. Atleast a 3 tonne increase in the mind numbing garbage.
I am with the publishing Industry on this one.....Thank you!!!!
I'm just curious - what are you working on in your Masters Degree? Is it 'Stating the bleedin' obvious' by any chance?
Ponn,
Nope, no direct involvement with econ and finance.
Sud,
It should not be called 'pirated'
Sara,
Yeah, the same argument can be applied to magazines and DVDs (which are completely pirated anyway)
Hari,
For once you are right....
Kiki,
So did it take you like two-days to come up with that?
haha ha
i'm with krithiga on this one..
Good one dude..simply put , why is knowledge so expensive ??
tosh,
it seems using the inr exchange rate is redundant. couldn't one just divide 100/6 and then * 9 and get the same value?
since the 100 and 6 are adjusted for ppp, i think the division itself calculates the exchange..
i could be way off here..
after you left town the md woman's team started losing. what did you do man!
Having no direct contact, Its really gr8 and something 2 b apreciated tht u r gaining knowledge abt these out of ur own intesrt :)
Next post pls :P
I read Freakonomics from rapidshare :p My book collection is too huge I have moved to ebooks!
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