Arnold Kling  

Those Silly French

How Much AA at TJ?... Are You Tired...

The New York Times reports,

Retail prices, particularly of books, are tightly regulated in France.

Using "loss-leaders," or selling products below cost to attract customers, is illegal. Other restrictions apply to books retailers must not offer discounts of more than 5 percent on the publisher's recommended price. Many independent booksellers choose to offer this discount in the form of a loyalty bonus based on previous purchases. Larger booksellers simply slash the sticker price of books.

But the free delivery offered by Amazon exceeded the legal limit in the case of cheaper books, the union charged.

The union said it was pleased with the court's ruling, which would help protect vulnerable small bookshops from predatory pricing practices.

A court in France ruled that free delivery of books was illegal. Obviously, this is an example of consumer-hostile regulation. A classic case of rent-seeking. Those silly French.

We can laugh, because nothing like that ever happens in the this country. No rent-seeking here. Nothing to see. Move along.

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COMMENTS (4 to date)
Mason writes:

Great post, I’d write more but my taxi’s here to take me to congress to give an impartial testimony on an issue in which I have no stake, I’m just going because I care about this country. Thanks Gordon.

Chuck writes:

Yes, thanks to innovations like needlessly proprietary standards, our open market system is impervious to things like rent seeking and captive customers.

MK writes:

Retail prices of books are regulated in Germany too (although we have free delivery from amazon...): We have a "Buchpreisbindung" which plainly requires every seller to charge exactly the recommended price.

Frankly I never came to grips with the economics of it but the results seem to be quite *positive* - compared with similar sized books market and the US we seem to have a comparativly larger amount of small, independent publishers, an larger amount of independent bookstores and prices are often CHEAPER. This is especially true for textbooks and academic literature. German textbooks are usually between 20-30€ even huge volumes in physics or medicine are rarely above 60-70€.
What's perhaps even more surprising are translated books: Mankiw's $121 "Principles of Economics" is €39 if you buy it in German - and it's the same with practically every translated textbook (and no, they are not subsidized)

Don't ask me why or how it works -somebody should do some research here- but the results of this regulation doesn't seem to be too bad if you ask me..

artha writes:

The french have this law so as to ensure that the bigger retailers dont end up making smaller retailers bankrupt by unfair competition. Selling at loss & cross subsidizing are artifacts of bigger firms.Plus, just like state aided French film industry, they consider these small neighbourhood shops as a part of their lifestyle/ heritage. It is a valid reason. Small business in France suffer a lot due to unfair competition and high taxes, but have some protections as this law in question.
Obviously, consumers pay.. In the corporatist state like France, state is all too powerful and consumer interest is not. For example- all the fines imposed to retailers for violating consumer laws go to state coffers.
Furthermore, amazon is american. They dont ban renault from selling lossmaking cars. (its known that two/ three big factories of them together with the associated models are lossmaking to "protect jobs".
Welcome competition....

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