If students in the United States go online and import the much cheaper Indian version of your textbook instead of buying the American edition, how might this arbitrage nevertheless help the publisher of your textbook?
A) It makes the prices in India and the United States more equal.
B) It saves money on the color ink for the graphs.
C) The students who go to the trouble to do this might resell the books for the higher American price and make a profit.
D) The students who go to the trouble to do this might have had low willingness-to-pay in the first place, so the arbitrage enables another layer of price discrimination.

Question

Quizplus · Accepted Answer

Importing the cheaper Indian version of the textbook allows the publisher to engage in another layer of price discrimination. Students who go through the trouble of importing the book likely have a low willingness-to-pay for the American edition, so by offering a cheaper alternative, the publisher can capture some of the consumer surplus that would have otherwise been lost. Additionally, the publisher may have different pricing strategies for different markets, so importing the Indian edition may also help them equalize prices across countries.

If Students in the United States Go Online and Import