Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

Ridiculous Booksellers Pull and Push Harry Potter

Written by johnleemk on 12:25:04 pm Jul 25, 2007.

I've never been a fan of Harry Potter. I'm undecided about claims that it promotes witchcraft, but I've never found J. K. Rowling's writing appealing. Then again, I've never been a fantasy kind of person — I barely made it through the Lord of the Rings trilogy, and I'm in no hurry to see any of the movies (yes, I'm that out of touch with popular culture).

Having said that, I think the last time I made fun of anyone for reading Harry Potter was in primary school. Everyone has different tastes, and I'm no rabid antifanboy.

One thing I'm confident in is the general ability of markets to determine the value of something to society, whether it is labour or sports shoes. Even mediocre literature can merit a high price if lots of people enjoy it. (And no, I have no interest in delving into the question of whether it is no longer mediocre if many people like it.)

That is why I was amused and slightly miffed when I found out that MPH, Popular, Harris and the Times bookstores decided jointly to pull their copies of the final Harry Potter book of the shelves after they found out that local hypermarkets had undercut their price by almost 40%.

I am not sure what they were trying to do, but I had quite a good laugh when they bitched about how they were being treated unfairly by the market. If the hypermarkets have gauged the Harry Potter demand appropriately, more power to them, no?

Of course, the crux of the complaint is that the hypermarkets are conducting predatory pricing — intentionally selling the books at a loss just to get people inside their doors so they will make up for their losses through selling other products.

But if society decides that that is the best way to get things done, who are the booksellers to disagree? Are they going to say, "No, you cannot buy books at lower prices, and get your grocery shopping done at the same time, because it's bad for us!"?

Of course, it's easy to tell what the booksellers were thinking. MPH, Popular, Harris and the Times constitute a decent portion of the book market in Malaysia, meaning they hold substantial power in this area.

Logically, they have no reason to stop selling the book. They could maintain it at the higher price, where they'd still make a healthy marginal profit on each copy sold, or sell it at a lower price (although they cannot of course match the heavily discounted price of the hypermarkets).

Economic thinking, though, dictates that if they can collude, they ought to. By pulling their supply of books off the market, they would of course reduce the quantity available. This would drive up the price of the books — in other words, this colluding group of booksellers wants to lure the hypermarkets into upping their prices. Then they have the perfect excuse to leap in and sell the books at a price higher than what the market would otherwise dictate. (Of course, in the long run, this isn't sustainable, but in the long run most people will stop buying Harry Potter books.)

Fortunately, common sense prevailed, and the attempt of these booksellers to corner the market fell flat on its face. They have meekly put their books back on the shelves at the old price.

These companies should thank their lucky stars that there are no antitrust laws in Malaysia. If there were, chances are they would be slapped with a significant lawsuit by now, because their attempt to collude and corner the market is as plain as can be.

Suppliers who drive down prices are doing us all a service. They provide consumers with cheaper products, or they go out of business (and thus give other suppliers a hint at what the appropriate price ought to be). If the hypermarkets can afford to charge a lower price, I see no reason not to allow them to.

If you'd like to keep informed about updates to the site, consider subscribing to our web feed:

Infernal Ramblings is a Malaysian website focusing on current events and sociopolitical issues. Its articles run the gamut from economics to society to education.

Infernal Ramblings is run by John Lee. For more, see the About section. If you have any questions or comments, do drop him a line.

Najib's Orwellian 1Malaysia

Most Recently Read

  1. Absolute vs Comparative Advantage
  2. Malaysia, A Statist Economy
  3. Bahasa Rojak, the True National Language
  4. Learn the Right Lessons From May 13
  5. Rephrase the Problem
  6. Malaysian Automobiles and the Infant Industry Argument
  7. Make the Yang di-Pertuan Agong Reign For Life
  8. God Can't Be (Dis)Proven
  9. Girl, Your Marginal Benefit Is Far Greater Than Your Marginal Cost
  10. Separating Head of State from Head of Government
Quoth the webserver...
It is always from a minority acting in ways different from what the majority would prescribe that the majority in the end learns to do better.
— Friedrich Hayek