Is it ethical to sell complimentary copies of textbooks?

Faculty Books Recycling is a company that takes the complimentary copies of textbooks that publishers send professors, resells those comp copies to students, and makes a profit on the transaction.

Faculty Books does everything possible to make professors feel that selling - or giving away - comp copies is an ethical thing to do. In their emails soliciting textbooks from faculty (sample below), they remind potential donors of the good that textbook recycling does. It puts textbooks into students' hands at a low price.  Those professors who choose to sell rather than give away their comp copies are told, "the money could sponsor a student event, be donated to  charity, or spent however you like."

I don't sell my comp copies - I lend them out, put them on reserve in the library (if it's a text I'm using), give them away, or just keep them on my bookshelf. This feels to me like the right thing to do (and, truth be told, I don't get sent a lot of comp copies anyway).

But is refusing to participate in the market the best choice from a moral point of view? 

This article in the Journal of Business Ethics examines professorial perceptions of the morality of textbook selling, and the circumstances under which professors think it's right to sell textbooks. The folks at Faculty Books must have read this article, because they do everything they can to frame textbook selling as a moral choice by, for example, pointing out that the money can be used to fund student activities. But what I'm interested in here is an ethical debate, the underlying moral principles, not mere perceptions.

The New York Times' Ethicists column recently debated the morality of selling freely given hand-me-downs, and came to no firm conclusion. One ethicist argued that selling gifts violates social norms of generosity, and thus is unethical. This argument, it seems to me, confounds social norms and morals - moreover, I am not sure that the relationship between textbook publishers and the rest of the world is governed by a norm of generosity. Another ethicist argued that a gift is a gift, to be disposed of by the recipient as he or she so chooses. However textbook publishers not uncommonly print "examination copy, not for re-sale" on complimentary copies - the "gifts are unconditional" argument hardly seems to apply either.

Another discussion board takes up the question here. The consensus seems to be that the morality of textbook selling is governed by the answer to one question: is it good for students or bad for students? Does the professorial practice of selling comp copies lead to higher prices for students overall, or not?

My intuition is that reselling comp copies would tend to lower the price of textbooks, not increase them. The presence of a vibrant second-hand textbook market tends to increase the elasticity of demand for new texts. Publishers can't charge as much for new texts if second texts are readily available. Anything that strengths the second-hand market - including reselling comp copies - would be expected to decrease the price of new texts.

What about the argument that sending complementary copies to professors increases costs, and those cost increases are inevitably passed onto students in the form of higher prices?  Prices are determined at the margin, by firms balancing off marginal revenues and marginal costs.   Marketing and promotion is a fixed cost of textbook production, so does not affect marginal costs, thus should not effect prices (unless marketing and promotion costs are so large that they prevent firms from entering into the market). Moreover, if professors start reselling their comp copies, publishers might think twice about sending out so many - and that would tend to lower costs, not increase them.

As Hayek (and Rowe) point out, markets are a way of transmitting information, and conveying goods and services to those who value them the most. Surely the sum of consumer surplus and producer surplus - and thus social welfare - is maximized the books are put on the market, and sold to those who were willing to pay for them.

So - there it is - the ethical argument for re-selling your comp copies. 

I still won't do it.

p.s. here's the relevant email from the book resellers.

Hello Frances,

 

You may or may not already be involved in our text book recycling program. 

This year the demand is greater than ever, we sure can use your help. 

If this is the first time you hear from us; Faculty Books Recycling redistributes

shelf copies that often sit gathering dust to students who benefit from our 

significant discounts. Very likely there are some of these textbooks around you 

right now.

These are texts that publishers often send unsolicited and sometimes remain 

on your bookshelf for many years, even in their original shrink-wrap. Wouldn’t 

it be nice to place current issues into student’s hands while they still can be 

put to good use?

In the next few days I would like to set up a time for ____ to visit 

with you, to see if there are any books you have which can be recycled.

Professor donations of these shelf copies provide the students with the lowest 

price on these textbooks. However we are still pleased to purchase them from 

you instead, and the money could sponsor a student event, be donated to 

charity, or spent however you like.

Please propose a time and date which is convenient to meet with you, and we 

will confirm availability shortly.

Comments

[Nick Rowe]

Good applied micro/welfare economics question. What happens to total surplus if profs do/do not sell their complimentary copies (and textbook publishers know they will/will not do this).

First (pathetically bad) cut at an answer: if the publisher gives out x free copies, the demand curve for the priced copies shifts left by x units everywhere. Assume MC=0, and a linear demand curve, the profit-maximising quantity sold falls by x/2 units, giving a net increase in output of x/2 units. Which increases total surplus.

But that answer assumes x is exogenous wrt profs' decisions to sell the complimentary copies.

[Lord]

I would say if publishers presumed any claim they would lend rather than give, possibly with a return mailer, so the claim can only be intended to apply to their own employees and for accounting purposes, or a disclaimer that no further obligation is intended or offered by providing it, so it is indeed a gift to do with what you will.

[Majromax]

I'd say that comp copies themselves are a questionable ethical practice, since there's a principal-agent problem with textbook selection.

Professors sent complimentary copies are more likely (by design) to evaluate textbooks for ease of instruction, clarity, correctness, etc. But students are the ones who nominally pay the price for those textbooks. While students and professors have different budget constraints, complimentary copies entirely insulate professors from the price signal.

Textbook selections might be different if professors had to buy their own instructor copies, or alternately justify their choice to the department to have the institution back their selection.

[Frances Woolley]

Nick - spot on as usual.I think your back of the envelope calculation implicitly assumes that people who buy the cheap texts are randomly distributed along the demand curve, which is probably a reasonable assumption.

Lord - true.

Majromax - I agree with you that professors' failure to take into account the book's price when assigning a text is a serious problem.

Do you think profs would even assign texts if we had to buy their own instructor copies? (Actually, yes, we would, because we can google .pdf too).

[Shangwen]

How would we feel if doctors sold off the free drug samples they all get? I know they legally can't because of laws about the sale of Rx, but in a hypothetical world in which that were possible, there would be similar arguments or rhetoric supporting or deploring it. Suppose a world where restaurants each get a few bottles of free liquor per month from vendors, should we deplore them then selling it at the bar? Why would we feel differently about Captain Morgan?

A lot of this probably has to do with the social status of the traded objects and the actors, rather than the issue itself. The NYT article (about used clothing) is mostly off-putting because the behavior is tacky and grubby to bourgeois eyes, and the arguments against it are pretty silly. In the case of the textbooks, there's a persistent assumption that students are somehow victims and that the profs are an ennobled elite who should be above commercial behavior. My sense is that the price of textbooks has a lot to do with regulatory and information assymetry issues that have nothing to do with competition. If textbooks were suddenly half their current prices, the assumption that selling freebies has to be a moral issue would likely vanish.

[Nick Rowe]

Frances: "I think your back of the envelope calculation implicitly assumes that people who buy the cheap texts are randomly distributed along the demand curve, which is probably a reasonable assumption."

After wandering to Tim Hortons and back, to think it over, I don't think I need that assumption. Let there be an demand curve for textbooks. For any price P set by the publisher, if the profs sell x copies at P, that reduces quantity demanded at that same P by x.

For any exogenous P and any exogenous x, I think it is welfare increasing for the profs to sell the texts if and only if the prof's reservation price is below the publisher's MC.

With P endogenous, for any exogenous x, I think it is always welfare-increasing for the profs to sell the textbooks. (But I'm not sure about that if MC > 0.)

The tricky part is when x is endogenous with respect to whether or not the profs will sell the texts, which is almost certainly is.

(I don't sell mine, BTW.)

[Neil]

Textbooks are physical items, so things like copyright and its associated licensing restrictions don't apply (unless, of course, you try to make a copy of the text). Thus, any "not for resale" disclaimer is unenforceable. If you're given a book with no expectation that you return it, then it belongs to you and can be traded, sold, or thrown out at your discretion. That deals with the legal side: you are perfectly entitled to donate or sell books that have been given to you.

Morally...I don't see why you would have a moral obligation here that goes beyond your legal obligations. Textbook publisher is trying to sell you something (something that you will not end up footing the bill for), and is giving away a free sample as part of the sales pitch. It's no different than passing on a sample container of dish detergent.

On the other hand there is a moral case for making the donation/sale. Hanging on to textbooks you're not using is a waste of resources that could be put to productive use in someone else's hands. The price impact for students that is discussed above is another point in favour of recirculating these texts.

[mike smitka]

If I request a desk copy, then I don't sell it. If a publisher insists on sending me copies of textbooks for consideration (unusual today, at least for me, but not unusual 10 years ago), especially for courses I don't teach and haven't taught, then I feel no compunction to selling them.

But if you sell, do so on eBay or similar: you get more money, buyers pay less than the university bookstore will charge for a used copy.

[Jim Harrison]

I don't have first hand knowledge of the situation today, but when I participated in pricing decisions at a textbook publishing company back in the 80s, the commonsense of the business was that the used book trade justified raising prices. I suppose everybody understood that there was a limit to how much you could charge, but nobody competed on price. Looking at the current astronomical prices for calculus texts, The peculiarity of the trade is that the ones who make the purchasing decision don't pay the price. Indeed, when I sold college textbooks, I normally didn't mention the price and the profs, in my experience, anyhow, never asked. It's a corrupt arrangement and part of the reason I'm glad I got out of the business, though I certainly didn't leave because I felt guilty about it. Looking at the current astronomical prices for calculus and economics texts, I see that things haven't changed all that much except that the prices are even more unreasonable than we dared to charge..

[Khalid Musah]

What I usually do with my excess copies is usually to take it to class the first day, tell the students the market price price of the text and then auction it off to the highest bidder. I then use all the proceeds to subsidize those who bid and lost[in descending order]. In this way, with a couple of complimentary textbooks, I am able to get few more students to purchase the textbook who may otherwise not afford it. Publishers get more customers, more students procure the textbooks we both win.

[Nick Rowe]

I think I rather like Khalid's answer. At first sight, it looks like Pareto Improving price discrimination?

[Donald A. Coffin]

My own position is that if I *requested* an examination copy, I would not sell it. But if an examination copy just showed up, without my having requested it, I would have no qualms about selling it. When I requested a book, I was saying, "I have some interest in adopting it, please let me see it so I can make a decision." If the book just shows up, I may never have had any interest in the book, or may have looked at an earlier edition and decided that it was not suitable for my course.

[khodge]

I am no longer a student and can afford to buy textbooks, however I use a more random method of obtaining textbooks: thrift stores. If I don't especially care which author/edition I get, I occasionally stumble across material I would never otherwise find. I found a complimentary copy of Mankiw's text that way.

Books sellers are using you as their marketing tool, much like Shangwen's example of drug samples. Why are they entitled to use you as a marketing tool without compensation? The example of gift-giving is not valid, either, for that reason.

[Nathan W]

Once given, it is your property.

Is it unethical to sell property? Should the market price depend on how you got it?

If there is an ethical argument against selling free textbooks, then perhaps we should tax inheritance at 50% - after all, that was given to them too.

... I generally found that profs were careful to ensure that extra copes of texts were on short-term loan at the library, and often cited alternative problem sets from old texts. Because of this, I think they didn't have to worry about text prices too much; poor students could always use the copy at the library or buy an old edition.

[Jack PQ]

I don't think anyone has suggested giving the textbook to a PhD student. They tend to have low income. I suppose they might resell the book, their call.