Irrational market!

I was just browsing Amazon for a book and I noticed that some of the ‘used’ books are being advertised at prices significantly higher than the basic selling price for the new book. Why would anyone purchase the book at the higher price? And why would the seller ask for such an obviously inflated price (some of the offers are 100% over the base price)?!

Perhaps the used book seller is assuming that the main store might run out of stock for periods of time, when their offer may well be relevant. Still, what is the rationale for a 100% markup?


4 thoughts on “Irrational market!

  1. Some possible explanations:

    1. The items were listed by casual/amateur sellers who simply listed the contents of their bookshelves to see what would sell. Since the time when they listed the items, the price has fallen, but the seller doesn’t know or care that his price needs to be updated in order to be competitive. (this seems like the most likely explanation)

    2. It is an item that frequently goes out of stock from Amazon retail, so the seller maintains a listing at a higher price, that may become the lowest price at a time when the Amazon and/or other sellers are out of stock. (or similar to (1), maybe the item was out of stock with Amazon at the time the listing went up, and the seller hasn’t bothered to check/change/remove the listing)

    BTW, I’m curious what price you’re referring to as the “base price”.

  2. Ram, there are more interesting phenomena. Once in a while, Amazon pulls up and down random “Yellow book series” prices. They are typically for the least best selling. As soon as you purchase, the price goes way up again. Why? My guess is they are inquiring about demand using their website…

    • Yes, that kind of probing would be a plausible explanation.

      I’ve also noticed something similar in that after putting a particular book in my basket as a ‘future buy’, I kept getting messages over a period of weeks informing me of small changes to the price. Clearly, they’re actively tweaking price according to supply/demand.

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