Assorted links

by on December 14, 2011 at 12:16 pm in Uncategorized | Permalink

1 Tony December 14, 2011 at 12:25 pm

There was an interesting Op-Ed in the Times about the Amazon thing as well, with lots of quotes from authors, one of which suggested it may not be exactly legal…

2 Jim December 14, 2011 at 12:46 pm

1: Crony capitalism at its best, 2011 Edition. If someone beats you on price and points it out, get the Government to complain that they are engaging in “anti-competitive behavior.”

3 Jim December 14, 2011 at 12:50 pm

>>”lots of people hate them for this”

The CEO of the American Booksellers Association hates them for this.

Fixed it for you.

4 Careless December 14, 2011 at 1:41 pm

No, Amazon isn’t being undercut on book prices (And B&N doesn’t even try to match their prices on books in-store, though they do online), this is mostly for other types of goods.

5 Brian December 14, 2011 at 12:50 pm

Do you seriously believe that this isn’t “anti-competitive behavior?”

6 Brian December 14, 2011 at 1:02 pm

Amazon is essentially paying people to disrupt business at these B&M’s. Would you consider one car dealership paying people that have no intention of purchasing a vehicle to tie up the sales staff at a competing dealership to be anti-competitive behavior?

Issues like this are why we have copyrights, trademarks, etc. The market can’t solve problems of time-inconsistency and free-riding. I believe B&M’s are due some protection in this case. At the least something should be done about Amazon’s explicit grab for the little value generated by B&M’s over its own already-dominant business model.

7 Andrew' December 14, 2011 at 1:11 pm

So, Amazon is paying people to go into a store….hmmm.

When did crushing your competition by out-competing become anti-competitive? Anyway, are they really disrupting their business, which would be trespassing, sabotage, or industrial espionage, or is that just the narrative?

8 Brian December 14, 2011 at 1:24 pm

Yeah, just like China is “out-competing” us by stealing all of our intellectual property. What registers on your scale of anti-competitive practices if this doesn’t even produce a blip?

9 Urso December 14, 2011 at 1:36 pm

The number on the price tag you put on a book is not your “intellectual property” under any plausible definition of that term.

You’d have a better argument that Amazon is infringing on their *physical* property, i.e., the store, by effectively allowing Amazon customers to use the local bookstore as a de facto Amazon storefront, free of charge.

10 Rahul December 14, 2011 at 1:50 pm

What the bookstores could do though is play the “Right of Admission reserved” card. Akin to the signs saying “Skateboards Prohibited” they could outlaw “use of barcode reading apps”. Agreed it might be hard to enforce but peer pressure sometimes works great.

11 Andrew' December 14, 2011 at 3:08 pm

No, your free-riding concept is an interesting point. But, you don’t know that the people don’t buy 10 books at the store and then report on the 1 book. If they are just, on net, comparing prices that is competition, not anti-competition.

IP is a different can of worms.

12 John Thacker December 14, 2011 at 2:55 pm

The market can’t solve problems of time-inconsistency and free-riding.

Issues like this are why we have resale price maintenance, and why the Supreme Court made it legal four years ago. That is the standard market solution. One which was banned by the Courts for being anti-competitive under another theory.

Resale price maintenance is *exactly* to address the issue of someone going into a high-service dealer then buying it from a discounter. The market solution in this case is for the publishers to forbid Amazon from discounting the books– as publishers have already done with e-books.

13 anonymous... December 14, 2011 at 5:19 pm

That won’t work. Amazon is already enticing authors to self-publish directly with them. With e-books, much of the logistical support and distribution that publishers used to provide has become superfluous, along with the marketing, which is now done on blogs and social media.

Was there really any need for Tyler to go with a traditional publisher for his TGS e-book, other than to avoid ruffling the feathers of the folks who still handle his legacy dead-tree output?

With books, or anything else that’s making the transition to electronic delivery, it’s a done deal already. The interesting question is whether Amazon can eventually do something similar for physical goods. Manufacturers with miserably tiny margins might be tempted to bypass retail stores.

14 Brian December 14, 2011 at 12:47 pm

#1 – I’m all for lessening informational frictions but I don’t see that as the key issue at play here. The usual Rah Rah Main Street crowd will weigh in but they miss the point as well. The issue is not of legality, protecting the little guy, whatever. It’s about the good old tragedy of the commons and the unbundling of “shopping” and “purchasing.” The reason this app and accompanying promotion are so distasteful is that it is explicitly encouraging consumers to help Amazon freeride on the services provided by brick and mortar retailers. Everybody knows you can find stuff cheaper on the internet; the real function of this app is to essentially steal what B&M’s do best, which is providing an environment for pre-purchase inspection of goods.

It’s easy to see that we’re quickly headed toward a huge reduction or restriction of local opportunities to inspect goods. Are we headed toward a future where we pay to shop a la Costco or Sam’s Club? I don’t think Amazon’s tactic is illegal but I do believe it is immoral. Does the social welfare increase or decrease because of this app and its accompanying nudge toward free-riding on the people that don’t feel right about stealing the surplus from shopping in a real store with real physical goods?

15 Andrew' December 14, 2011 at 1:14 pm

If the B&M goes away then so does the free-riding. You can search inside books on-line. The local inspection could disappear because it is too costly.

16 Andrew' December 14, 2011 at 1:15 pm

I also free-ride the crap out of Amazon reviews. It’s probably the most significant free-riding I do.

17 D December 15, 2011 at 9:09 pm

I free-ride their listings via this cool thingy that checks to see if my local library has the book I’m currently perusing.

Can’t wait until this comes to e-books.

18 Brian December 14, 2011 at 1:25 pm

That’s the point. Just because it’s an equilibrium outcome doesn’t mean it’s the first best.

19 Andrew' December 14, 2011 at 3:07 pm

But maybe it is. B&M bookstores seems like a really dumb concept to me right now.

20 Andrew' December 14, 2011 at 3:16 pm

And I’m not saying I oppose B&M bookstores. I just never go test drive a book. I’m not sure what about seeing the book would make me want or not want it. We don’t even need physical books anymore. It’s simply that now we have these technologies that make the book and the bookstore sans coffee essentially obsolete.

21 Rahul December 14, 2011 at 3:18 pm

Right. Should we have been morally outraged that Pricewire, Expedia etc. drove B&M travel agents out of business? Wasn’t the uniformed hotel porter or shoe-shine man as much a piece of bygone American culture?

22 Andrew' December 14, 2011 at 3:48 pm

If the free-riding thing is true, then we can be annoyed. There may be situations where it is true. But I’m not sure its true here. It might be that B&Ms just want you to have to come in because they don’t advertise the price and since your time isn’t free overpay for a book out of convenience.

23 Careless December 14, 2011 at 7:56 pm

Uniformed hotel porters are still found at expensive hotels.

I don’t know how many luxury book stores, if any, can survive in the same way.

24 Urso December 15, 2011 at 12:52 pm

The state of the average man’s shoe is disgraceful these days. O tempora O mores

25 John Thacker December 14, 2011 at 2:57 pm

It has nothing to do with the tragedy of the commons, because it’s not a commons, and there are perfectly free market solutions to this problem, one of which is resale price maintenance, which is now legal in the US.

26 Brian December 14, 2011 at 3:56 pm

I’d say open shops are similar enough to whatever you would define as a true commons. There is obviously some utility to being in an actual physical retail store, they haven’t all disappeared yet. This is all about negative externalities just like with the standard commons problem. I don’t internalize the social effect of my abuse of a free and open retail store which leads to the eventual closure of the store. It’s not all about pricing, it’s about the abuse of a service (pre-purchase inspection) that is cumbersome to charge for if it’s not included in the final sales transaction. Resale price maintenance isn’t going to solve that problem. To legitimize this practice as Amazon is trying to do is only hastening the eventual bad equilibrium of a bunch of store closures. I know a lot of people here don’t care but you can’t argue with the fact that retail sales are still enormous years after internet sales hit prime time so it’s not like this is a pure price competition issue.

27 Andrew' December 14, 2011 at 4:44 pm

It seems we care to an astonishing degree.

My point is simply this, how much utility is there to pre-purchase inspection of books? They don’t want you to do too much, I used to get yelled at in the comic book store for that.

Also, this is balanced against free-riding on the on-line reviews, followed by in-store purchase. For the most part, the terrible stores are or are going out of business, and Amazon does an amazing job.

28 byomtov December 16, 2011 at 9:05 pm

For me, there’s a lot of utility. Not so much for pre-purchase inspection as for aimless wandering, browsing, picking up something that looks interesting, talking to a knowledgeable clerk, exchanging opinions with other customers, etc.

29 Andrew' December 14, 2011 at 5:12 pm

Books are just a really a bad example of your point. We are in the bad equilibrium.

30 Floccina December 15, 2011 at 12:07 pm

It is not clear to me that the store will be unable to capture benefit from the Amazon customer visiting their stores (sell them coffee at a high price). It is a tough world for all businesses they need to be creative to keep up.

31 Malcom Digest December 14, 2011 at 1:00 pm

Isn’t the whole point of the Amazon Price Check app to allow to adjust prices accordingly? When Amazon is setting the prices for you, it’s not like they need to compete with every store in the country, just the ones in your neighborhood.

32 Tony December 14, 2011 at 1:08 pm

Couldn’t they conceivably use the data from the app to raise prices to increase profitability while still remaining cheaper than bricks & mortar stores?

33 Rahul December 14, 2011 at 1:29 pm

Exactly my thoughts. The real suckers were the price-checking consumers; Amazon’s eating into the consumers surplus not into the High Street book seller sales.

If I were an independent store shouldn’t I be more worried if Amazon was soliciting reports of low prices rather than high prices?

34 Careless December 14, 2011 at 1:44 pm

If your price is lower than Amazon’s, aren’t you going to be advertising it? IOW, shouldn’t Amazon have easier ways of seeing what other people are selling more cheaply if they’re generally the cheapest seller in that type of good?

35 anon December 14, 2011 at 4:03 pm


36 Jens Fiederer December 14, 2011 at 1:33 pm

There might be a bright spot for the B&Ms here….the promotion probably got people to go INTO there stores that would not have even CONSIDERED going into them – and then spotted a book they wanted RIGHT NOW. One of the few advantages of the B&Ms is immediate gratification (for the paper product – with the Kindle edition you get that from Amazon too).

37 yes December 14, 2011 at 5:58 pm

I only use Amazon now. With this app, I might actually go into stores again and even buy stuff if I felt I had to have it right there, right now.

38 Joseph Ward December 14, 2011 at 3:05 pm

Acemoglu is absolutely one of the best economists in the world right now!

39 mjw149 December 14, 2011 at 3:30 pm

The NBA article, right or wrong was brilliant on many levels. Stupendously entertaining read. Good pick, Tyler.

40 Ken Rhodes December 14, 2011 at 4:50 pm

What he said!

Why this is my favorite blog — sixty-odd comments on the rise, fall, and rise again of food in America, and an article on the rise, fall, and rise again of style in the NBA.

41 Brian J December 14, 2011 at 3:47 pm

Am I missing something? I keep trying to find TGS in French for Kindle, but I can’t see the link. Which makes me think the guy linked to above is full of it.

42 Douglas Knight December 14, 2011 at 4:28 pm

Amazon has had a similar app for a year or two that lets you know Amazon’s price. The new development is telling Amazon the local price. But I haven’t seen any coverage about that change. This article mentions it in the headline, but that forgets it. All of the angry response is about comparison shopping, not about giving info to Amazon.

43 Leslie Katz December 14, 2011 at 4:48 pm

So the real reason France is in trouble turns out to that an American retailer gouges its foreign customers. It doesn’t only happen to French customers, though. It happens to all foreign customers, including Canadian and Australian, to name two countries in which I’ve experienced the phenomenon.

44 Careless December 15, 2011 at 12:25 am

… what?

45 Tim Ogden December 14, 2011 at 5:05 pm

I really don’t understand why this whole conversation about Amazon has centered on books. The value of the discount (5%) on the average price of a book (say $15 to be generous) was .75. How many people went out of their way to scan something for .75? I doubt it was very many.

On the other hand, the price check app worked for all sorts of products that are higher priced and would generate a higher discount. And which Amazon also sells in huge volumes. The competitors who suffered from this were almost certainly not mom and pop stores but WalMart, Target, BestBuy and CostCo who are selling electronics and relatively expensive name-brand toys. Many of these firms have increasingly turned to uniquely serial numbered products (which are otherwise identical) to hamper price comparisons (for instance try to do a direct price comparison of the Samsung appliances offered at Lowes, Home Depot and Best Buy).

Finally, I fail to understand how this is any different from the traditional “we’ll beat their price” guarantee. I used to hear ads all the time encouraging people to go into the local car dealer and “negotiate your best price and we’ll beat it”.

In sum, there is nothing new under the sun here, except growing ubiquity of mobile devices.

46 Rahul December 14, 2011 at 6:08 pm

The product they scan and the product they use the discount on doesn’t need to be the same.

47 Paul Johnson December 14, 2011 at 6:20 pm

Some large B&M retailers have been pushing for a national sales tax because on-line retailers quite properly don’t collect taxes for states where they have no presence – i.e. states where they receive no state government services and are not under those states’ jurisdiction. Amazon is fighting back.

48 Douglas Knight December 14, 2011 at 9:40 pm

4. “if top incomes were taxed at 99%, then no CEO would be tempted to do semi-illegal things in order to increase his pay, because there would be nothing to gain from doing so.”

except evade taxes.

How reliable are these tax-based measures of income from the 50s, when the top marginal rate was 90%? or even from the 70s when it was 70%?

49 [Insert here] delenda est December 14, 2011 at 11:09 pm

Emmanuel Todd gives us the Krugman version of the EU crisis, but in pur et dur. Budget deficits are just ‘a distance consequence’ of the internal trade imbalances haha.

Like Krugman, but with more psychoanalysis and blunter expression, he basically thinks that Germany should be punished for daring to run a long-term austerity plan and profit from it.

Germans and the rest of the world who aren’t economists think that the Club Med countries should be punished for letting their costs skyrocket and failing to ever balance a budget, but that’s just layman ignorance.

Happily all is not lost, no-one listens to foreign economists in Germany!

50 Neal December 14, 2011 at 11:29 pm

If I were an independent bookseller, I would raise all my prices $8 and then tell my customers I’d give them $3 under whatever Amazon offered.

51 Careless December 15, 2011 at 12:27 am

And go bankrupt in a week?

52 Rahul December 15, 2011 at 1:15 am

Re: Amazon

Do I get the 5% discount just for scanning any B&M store price tag? Or does it actually have to be higher than the Amazon tag? What are the rules?

53 Mike in Shenzhen December 15, 2011 at 5:58 am

I noticed the Acemoglu link was buried (5th) and hasn’t received a single comment. I’m shocked. Shocked I say.

54 Mike in Shenzhen December 15, 2011 at 5:59 am


55 DavidN December 15, 2011 at 6:39 am

Reflection on audience.

56 Asher December 15, 2011 at 10:33 am

I notice that Amazon was careful to prevent free-riding in the other direction; their Conditions of Use forbid “any downloading or copying of account information for the benefit of another merchant.” Sauce for the goose etc.

57 Floccina December 15, 2011 at 12:14 pm

The B&M can offer in store rebates messing with Amazon’s prices.

58 Vera December 27, 2011 at 8:59 pm

Re Amazon. Independent booksellers (or whoever is actually being targeted by this strategy…) should be thrilled by this new policy. Amazon is usually the cheapest place to buy anything, so better information about competitor’s prices will simply allow them to raise their prices to match the next best deal available. Much less likely for them to discover that they need to reduce their prices in order to compete with smaller businesses.

Implicit collusion relies on price transparency. If local sellers are matching amazon’s prices (which in my experience is very obviously happening), and now amazon starts matching local competitors’ prices, both prices can drift up together.

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