Nominal Rigidities and the Law of One Price Break Down
By Bryan Caplan
Behavioral economists often emphasize nominal rigidities – such as the tendency of list prices to stay the same in the face of shifts in supply and demand.
Neoclassical economists often emphasize the Law of One Price – the tendency of identical commodities to sell for the same price.
In the market for my book, both of these regularities have broken down. Over at Amazon, the price for my book has skyrocketed to 50% above its cover price. So much for nominal rigidities.
And yet, over at Barnes and Noble, my book still sells for one-third less than the cover price – with no waiting period. So much for the Law of One Price.
Fortunately, my publisher tells me they’re hard at work to restore sanity to the market. Another run of several thousand copies should ship next week or so. It’s a good thing too – explaining how markets work is hard enough as it is.
Update: Amazon now says the book is in stock, and slashed the price to $17.97, a new low.