ABSTRACT
Ten years ago I bought a violin made in 1761 and it is now worth four times the amount I paid for it. That is an example of a price determined by supply and demand. I am the inadvertent beneficiary, since I bought the violin with the intention of playing it, not of making a profit. In my activities as a publisher, nothing of the kind ever happens. If I make a profit (or manage to cover expenses), it is not due to the vagaries of supply and demand but to the markup above cost. Every two years the prices of books and periodicals must go up or we don’t stay in business. The two-year pricing period is arbitrary; the regularity of price-raising is not. Of course there is always the question: will people pay more? And there is always the answer: apparently they will. A perusal of the New York Review of Books shows that other publishers are raising their prices. A visit to Altman’s shows that the price of raincoats has gone up. It’s hard to say how much; I don’t keep track of that. I simply come away with the impression that prices are going up rapidly and that I am justified in raising mine too. The newspapers report an average increase of 6 percent a year. My own costs go up almost precisely at that rate. The result of these unscientific observations is that I raise my prices by about the same amount. And that, believe it or not, is how prices are set in most of the U.S. economy-not just by big operators, but by everybody except rare violin dealers and farmers. My staff also reads the papers and goes shopping. Inevitably it follows that a big part of my cost increase takes the form of higher salaries.
