Hardcover Books The marginal cost of printing a typical hard cover novel is $12.00 while the same book in paperback has a marginal cost of $2.00 lower. So why do publishers charge an average of $15 more for hard cover books?
Hard cover versus paperback is used as a price discrimination scheme. Paperback versions usually come many months after the hard cover version. Customers who really like a particular author are more demand inelastic and tend to be impatient for the next book. This way the publishers can extract a higher price from the inelastic customers before they charge a lower price to the more elastic segment of demand.
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