Optimal Durability vs. Planned Obsolescence in the Textbook Market

Abstract

We revisit the idea that textbook publishers revise frequently in order to "kill off" the market for used books. While a popular idea, conflicting durable good models suggest alternatives to planned obsolescence. To address this particular case, we develop a model of the textbook market that generates unique empirical predictions for each of the three most relevant theories to the textbook industry. We then compare these predictions to empirical findings, such as the effect of the stock of used books on prices and revision, as well as the common practices of durability reductions and leasing; to determine which one best describes the market. The theories we model are; optimal durability, quality differences and time inconsistency. Of these models, quality differences, which generates planned obsolescence, best fits the stylized facts.