Variations in on-line prices

When you go to buy enterprise software, you never really expect to pay the list price. Businesses are now fairly good at manipulating software vendors, waiting until right before the end of the vendors' fiscal quarter or year, always waiting until they're ready to buy to get the "what if I commit to buy right now?" discount, etc. But things where there's really no way to negotiate prices, you expect prices to be set at what the business thinks that they can get for something. This is why I don't understand the prices of books that I see at various on-line stores.

When I went to Amazon.com just now to get some examples, I was surprised to find that prices advertised for the first book that I randomly picked ranged from a low of $16.47 to a high of almost $1,000. And that's for the same condition, etc. The next few books didn't have as dramatic a range, but the range was still surprisingly high: from $14.45 to $24.95 (a factor of 1.7 from low to high), from $18.95 to $87.56 (a factor of 4.6) and from $55 to $129.64 (a factor of  2.6).

Some people tell me that on-line book stores will often put a very high price on a particularly notable book just to advertise the fact that they have a copy, never expecting to actually sell it at that price. Apparently they think that this is an effective type of advertising. But with a book that lists for less that $20, I can't believe that that model works very well.

And if you're an on-line business who wants to set the prices for your books, wouldn't you check to see what the normal range of prices is for your books before setting your own prices? After all, if you set your prices higher than others have it's probably reasonable to assume that you are not going to sell your copy until all of the lower-priced alternatives have sold.

There's almost always a reasonable explanation for business' behavior, but it's not always obvious what that explanation is, and that's one of the big reasons that economists get paid to do what they do. Maybe this is the sort of thing that some economics graduate student can explain and write up in his dissertation.