While justifying his decision to sell a one-use textbook to his students, a BYU econ professor states:
A word about the Kearl text. I do not receive any royalties and have no economic interest in the text – when you buy the text, not a single penny goes to me. It’s designed to be a “disposable,” one-use text in order to keep the price down. (The used book market actually drives up the price of texts – to see why, think of what would happen to car prices if used car sales were not permitted.)
How does the used car markets drive up the price of the good? With an used market, the buyer is willing to pay more, knowing that he can resell later. However, without an used market, everyone is forced to buy new cars, raising demand, and thus raising the price of new cars. How to think about these countervailing effects?
Are the used books and used cars market actually analogous like the professor suggests? The professor and his publisher have a monopoly on the new textbook, but no one controls the new car market. Therefore, if people keep reselling text, the publisher will use their monopoly and raise the price of new books to compensate. In contrast, car manufacturers can't do so due to competitive pressure.