A fixed book price would reduce sales of Quebec titles by 17%

MONTREAL, Feb. 7, 2013 /CNW Telbec/ - Far from contributing to the vitality of Quebec culture, the establishment of a fixed book price, as proposed by the Nos livres à juste prix (Our books at a fair price) lobby group, would ultimately reduce total book sales by 14%. Quebec titles would be even harder hit, with a 17% drop in sales. This is the first time these figures have been available for the province of Quebec, and the details of the calculations can be found in an MEI Note published today.

Contrary to the claims of Nos livres à juste prix, the establishment of a fixed price reduces the range of available books. Indeed, since the abolition of the fixed price in England, publishers in that country have published a growing number of titles, while in Germany, where the fixed price is still in effect, the number of new titles has remained constant. There is therefore a greater diversity of works when prices are not controlled.

"The industry repeatedly cites the French case, where book prices seem to have risen more slowly than in England, a country where prices are not fixed. This reasoning is seriously flawed, however, based as it is on an unweighted average. One should expect, in a thriving market for new books like England's, a certain proportion of highly specialized books that sell for a high price. It is precisely the broad range of books that skews the average price," explains Vincent Geloso, coauthor of the Economic Note.

A law that would prevent retailers from offering discounts to readers would have the direct result of raising the prices of the most popular books. Of course, eliminating competition by fixing prices would perhaps allow the book industry to earn higher profits and save certain bookstores. "However, how would Quebec readers respond to having to pay more for their books? It's a safe bet that some would switch to electronic books and Internet shopping. Others would probably reduce their book purchases," adds his colleague Youri Chassin.

"Cloaked in noble intentions for the protection of culture, the book industry is requesting the creation of nothing less than a cartel, for the explicit purpose of price fixing. Remember that a similar cartel was abolished by the Competition Bureau of Canada in 1951," explains Mr. Chassin.

The Economic Note entitled The Consequences of a Fixed Book Price was coauthored by Vincent Geloso, doctoral candidate in economic history at the London School of Economics and economist at the MEI, and Youri Chassin, economist at the MEI. The complete publication and the annex with the relevant calculations are available at iedm.org.

The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its publications and conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

SOURCE: MONTREAL ECONOMIC INSTITUTE

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