Archive for July, 2008

Canadian Book Prices

When I was young, U.S. books sold in Canada for the U.S. price, paid in Canadian dollars, and stores in tourist spots in Maine would take Canadian dollars as equivalent to U.S. dollars. Then the Canadian dollar started to sink against the U.S. dollar. Stores started putting up signs saying that they took the Canadian dollar at, say, 90%, and books started to get two prices. After a while U.S. stores stopped taking Canadian money at all, but books still had two prices.

Now the Canadian dollar has again reached parity with the U.S. dollar. This has happened mainly because the U.S. dollar has dropped in relative value, because the U.S. has become a huge importer of goods and because U.S. interest rates are fairly low. But book prices have not adapted. This means that when I’m in a Canadian book store, I could buy a U.S. book for 11 Canadian/U.S. dollars, or I could wait until I go home and buy the same book for 8 U.S. dollars.

There is obviously a big arbitrage opportunity here–I could buy books in the U.S. and resell them in Canada for a significant discount. I don’t know the arrangements that bookstores have with publishers, but clearly somebody is making a great deal more in Canadian money here. Book aren’t easy to transport or sell, so it would be hard for me personally to take advantage of the arbitrage. The company which presumably is taking advantage is Amazon. Amazon can sell books at U.S. prices, so it is now in the economic interest of Canadian consumers to buy their books from Amazon rather than from a local bookstore.

Amazon already puts huge pressure on local bookstores, so if the currencies remain similar in value, and if book publishers take a couple of years to adjust their pricing, then it’s hard to see how local Canadian bookstores can survive. At least, that’s the theory. In practice, I saw more and better bookstores in Canada then I see at home in the U.S. In the U.S. all the bookstores other than specialty stores or mass chain stores are dying. Their credit with the publishers is drying up, their shelves are getting emptier, and that is a downward spiral with only one ending. I didn’t see this in Canada, but that may also just be because I’m not familiar with the bookstore landscape.

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