Open Letter to the OSU Faculty Council



I read with amusement the report in this week‚s Faculty Council minutes on the operations of the OSU Bookstore. In it, the Bookstore was portrayed as some sort of benevolent enterprise looking out for the best interests of OSU students. For a decidedly different viewpoint, you should talk to publishers‚ representatives. They tell me that our Bookstore is absolutely the worst one in the region to work with. (The „regionš typically includes Oklahoma, northern Texas, western Arkansas and Missouri, and Kansas.) The issue is the aggressiveness with which our Bookstore pursues the used textbook market.

Essentially, if a textbook is more than a semester old, the Bookstore will be stocked with nothing but used books. Here are two incidents. (1) Several semesters ago, I switched textbooks in my graduate international accounting class. The new edition had come out in November of the previous year and I walked into my class in August (Fall Semester) to find every student in the class with a used book. The book was less than 9 months old! And, this is not a big selling book, either. So, the publisher was happy to have my adoption but made no money on the deal. (2) Several semesters ago, we switched textbooks in our Accounting 2103 (Principles I) class. The book we switched to was a year old. The publisher‚s representative told us that, since our Bookstore would only be selling used books, he would make nothing on the adoption. At the same time, he would be providing our professors and TAs all of the free ancillaries that go with a textbook. Basically, he was going to lose money on the adoption. We asked our Bookstore if it would be willing to stock new textbooks for just the first semester. The answer was no. So, that first semester, we did an „end-around sweepš and shrunkwrap some workingpapers with the book. This way, the publisher could also make some money on the adoption.

According to the Faculty Council report, used textbooks are pursued to keep costs down for students. The report failed to mention that the Bookstore makes more money on used books than it does on new ones. The report gave an example of a book costing $100 new, which the Bookstore would repurchase for $50 then re-sell it for $75. If this example is typical, then the Bookstore has a 50 percent markup on used books. New books don‚t have similar markups. Moreover, new $100 books don‚t have a $25 markup, either. So, the markup on used books is higher both in percentage terms and absolute dollars. My point here is simply to tell the whole story about why the Bookstore sells used textbooks.

Of course, used textbooks have created a vicious cycle. The Faculty Council report cites shorter revision times and publisher shrinkwrapping as operating difficulties for the Bookstore. These are natural business responses by publishers to the used textbook phenomenon. You may ask, „Well, who cares about the publishers?š Don‚t forget that they provide lots of freebies such as instructor‚s manuals, solutions manuals, transparencies, and on-line support. They need to make something on an adoption, too.

Here is another incident. I recommend to my undergraduate students that they buy a supplemental student study guide if they are having trouble understanding the material we cover in class. Two weeks into this semester, one of my students tried to buy the study guide from our Bookstore, but she found that it had been sold out. Would the Bookstore special order one for her? No. The Bookstore doesn‚t do special orders. So, she went to Cowboy Book, who was more than happy to special order one for her. This hardly shows concern for students as portrayed in the Faculty Council report.

We have to recognize that the OSU Bookstore is a near monopoly. And, according to the Faculty Council report, it is a hugely profitable one at that. The report states that these profits are needed to subsidize other operations of the Student Union. These comments raise two red flags: monopoly and subsidy. Economists warn us about both: we should be leery of monopolies and subsidies are often inefficient ways to achieve desired ends. Are the OSU Bookstore‚s monopoly profits sustainable? I don‚t know, but I am glad that the Faculty Council is looking into the operations of the Bookstore and how they fit into the overall viability of the Student Union.


Gary K. Meek
Professor of Accounting

For information about this page, send e-mail to Dr. Charles Edgley.

OSU Home Page | About OSU | Academics | Connections
Admissions | Centers | Colleges | Research | Extension