Cross-Country Price Differentials in the Online Textbook Market

Abstract

This paper investigates the cross-country differentials in online textbook pricing. The sample included prices of 95 English-language textbooks at nine large online bookstores the United States, Canada, the United Kingdom, and Germany in the spring of 2001. Regressions with individual book and store fixed show that textbooks were substantially cheaper in major foreign online bookstores than in major United States online bookstores. The differences between the least expensive United States bookstore in the sample, Barnes and Noble, and the least expensive foreign bookstore in the sample, Alphabetstreet (UK), were 42 percent of list for a single book using standard shipping or 23 percent of list for expedited shipping. Differences were significant even across branches of Amazon. For instance, on a bundle of five books that had a list price of $500 in total using standard shipping, a student could save $167.66 by buying the books from Amazon (UK) rather than Amazon (US) and waiting an additional week for delivery. If the student choose the expedited shipping option (1-3 days) for both stores, she could save $151.44 by buying the books from Amazon (UK). Savings were even larger if the student purchased from either Alphabetstreet (UK) or Studentbookworld (UK). Research for this paper was conducted as part of Choon Hong Tay's senior honors thesis at Carnegie Mellon University. The authors gratefully acknowledge research support from the Carnegie Bosch Institute at Carnegie Mellon University.

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