Principles of Economics Textbooks and the Market for Ice Cream

 [[{“value”:”Rey Hernández-Julián and Frank Limehouse writing in the Journal of Economics Teaching write that very few principles of economics textbooks deal with modern information and digital tech industries: The main takeaways of our review are highlighted by two stand-alone textboxes found in Mankiw’s (2023) textbook. This textbook has been regarded as one of the most
The post Principles of Economics Textbooks and the Market for Ice Cream appeared first on Marginal REVOLUTION.”}]] 

Rey Hernández-Julián and Frank Limehouse writing in the Journal of Economics Teaching write that very few principles of economics textbooks deal with modern information and digital tech industries:

The main takeaways of our review are highlighted by two stand-alone textboxes found in Mankiw’s (2023) textbook. This textbook has been regarded as one of the most dominant players in the principles of economics textbook market for over 20 years. In the introductory chapter of the 10th Edition (2023), “Ten Principles of Economics” there is a stand-alone textbox with the Netflix logo with the following caption: “Many movie streaming services set the marginal cost of a movie equal to zero”. However, there is no further explanation of this statement in the chapter and no presentation of the concept of zero marginal cost pricing in the remainder of the entire textbook. In Chapter 2 (“Thinking Like an Economist”), there is an In the News article from the New York Times, “Why Tech Companies Hire Economists”, but very little coverage in the text on how to apply microeconomic concepts to the tech industry. These two discussions of the tech industry in Mankiw’s text exemplify many of our findings from other texts….updated examples from the modern economy seem to be afterthoughts and detached from the central discussion of the text.

…There are some notable exceptions. The most significant coverage of these questions is in Chapter 16 of Cowen and Tabarrok’s Modern Principles of Microeconomics, 5th edition (2021). In this chapter, the authors discuss platform service providers, such as Facebook, Amazon, Google, Visa, and Uber, and the role they play in competing “for the market,” instead of “in the market.” They also discuss why the prevailing product is not necessarily the best one, how music is a network good, and why these platform services may give away goods for ‘free’.

I would also point out that our example of a constant-cost industry (flat long-run supply curve) is domain name registration! As we write in Modern Principles:

Now consider what happens when the demand for domain names increases. In 2005, there were more than 60 million domain names. Just one year later, as the Internet exploded in popularity, there were more than 100 million domain names. If the demand for oil nearly doubled, the price of oil would rise dramatically, but despite nearly doubling in size, the price of registering a domain name did not increase…the expansion of old firms and the entry of new firms quickly pushed the price back down to average cost.

In short, it’s called Modern Principles for a reason! Tyler and I are committed to keeping up with the times and not just adding the occasional box and resting on our laurels.

See Hernández-Julián and Limehouse for some further examples of how to introduce modern industries into principles of economics.

The post Principles of Economics Textbooks and the Market for Ice Cream appeared first on Marginal REVOLUTION.

 Books, Current Affairs, Economics, Education