If Students in the United States Go Online and Import

question 84

Multiple Choice

If students in the United States go online and import the much cheaper Indian version of your textbook instead of buying the American edition, how might this arbitrage nevertheless help the publisher of your textbook?

• A) It makes the prices in India and the United States more equal.
• B) It saves money on the color ink for the graphs.
• C) The students who go to the trouble to do this might resell the books for the higher American price and make a profit.
• D) The students who go to the trouble to do this might have had low willingness-to-pay in the first place, so the arbitrage enables another layer of price discrimination.

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Definitions:

Money Center Banks

Large banks that borrow from and lend to governments, other banks, and corporations.

Corporations

Legal entities that are separate from their owners, with the ability to own assets, incur liabilities, and engage in business activities.

Other Banks

Financial institutions that provide a range of services including deposits, loans, and investment products, distinct from the context's primary banking entity.

Clearing House Interbank Payments System

A network used by financial institutions to send and receive payments or securities in large volumes, typically for bank-to-bank transactions.