Regulating Book Prices? Bad Idea.

The Quebec government’s proposal to regulate the price of books is wrong-headed in all sorts of ways. The proposal — or rather the range of proposals, currently being considered by a parliamentary commission — would likely involve fixed prices and/or a limit on big bookstores’ ability to offer steep discounts on best-sellers.

The move would amount to taking sides in the marketplace: not surprisingly, the owners of small bookstores (ones that can’t buy and sell in bulk) are in favour of the proposed regulations, as are their allies in the union of Quebec writers (UNEQ). And while it is sometimes reasonable for governments to take sides in this way, the reasons need to be carefully examined on a case-by-case basis, and clear analysis requires transparency about the fact that sides are in fact being taken, and that there will be winners and losers as a result.

Of course, it matters that this story is about Quebec, a jurisdiction that for years has seen its politics dominated by the perceived need to protect the French language. According to the UNEQ, small bookstores are “guardians of diversity,” which basically means they’re a source of French-language books. But then, I would wager that Amazon sells, or soon will sell, more French-language books than all the wee bookshops in La Belle Province put together.

In fact, it’s a bit weird that reports about this bit of news don’t mention Amazon. I’m no expert on book-selling industry, but it seems to me that the real battle is between Amazon and the big-to-medium-sized bricks-and-mortar stores. There will always be a niche market for cute, idiosyncratic little bookstores. What’s less clear to me is that there’s a future for bigger stores that merely try but fail to replicate in bricks-and-mortar what Amazon does online.

The most general reason why this proposed policy is a bad idea is basic economics: when governments choose sides in the marketplace, they are opting against the type of efficiency at which markets excel, namely the kind that brings consumers things they want at low prices, and that rewards producers for finding effective methods of production and management in pursuit of such consumer satisfaction.

It’s worth considering what the public reaction would be if the product in question were something other than books. What if the government of Quebec proposed keeping the price of children’s clothing high, in order to limit the impact of Walmart and to defend the little boutiques selling hand-made clothing. Would anyone seriously want to promote a policy making kids’ clothes more expensive this way?

But beyond basic arguments about economic efficiency, it has to matter here that the products in question are books. Isn’t literacy and reading more generally a good thing, socially? So isn’t it a good thing when books are cheap? The complaint of the small bookstores is that big stores making books too cheap. But any attempt to keep prices high is necessarily an attempt to keep some people from buying books. There will always be ‘marginal’ readers who will buy a given book at a reduced, big-box price, but not at list price. Of course, we can’t (alas) ensure that everyone has access to everything they want, but do we really want to exclude such people from buying those books, as a matter of government policy?

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