A bookshop economy

Today I'm in Hay-on-Wye, a small town buried miles from anywhere on the Welsh-English border, with the highest number of bookshops per inhabitant of anywhere in Britain and probably the world.

Can this possibly be an economically stable situation?

Today, a mild springtime Saturday, there are plenty of visitors - and I'm sure they will all spend some money in several shops. But is this really enough to make a living?

There are several characteristics which probably make this local economy more sustainable than one would expect:

• Books, especially second-hand books, are not commodities - for most books here, there's probably just a single copy in one shop. This reduces the competition between shops and allows them to maintain greater margins.
• There's an annual festival where 80,000 people come here and the bookshops - and everyone else in town - makes an absolute fortune. The existence of the bookshops the rest of the year strengthens the credibility of the festival.
• People use books as a very obvious signal of their intellectual credentials - and the association of Hay with books enables people to send the same signal with their choice of vacation.
• The existence of so many bookshops creates an expectation that you should buy something - in the same way as few people would visit Bordeaux without bringing some wine back.

But I suspect that few bookshop owners here make the living they could if they found a book-deprived locale somewhere else in the UK. There must be a strong "production preference" meaning that the booksellers derive utility from the actual process of engaging in the trade, not just for the earnings they can get from it. Surely a common phenomenon among pub and restaurant owners too.

So what have I bought? One of the shops did have about fourteen shelves of economics books, including an old edition of Greg Mankiw's text which I considered buying just so he wouldn't get the royalties (analyse THAT, economists); but most of them were rather old-fashioned texts proposing interventionist economic policies in 1970s and 1980s Britain. I did get hold of an interesting-looking colloquium on currency targeting edited by Paul Krugman (quite relevant now - a post on that tomorrow if I can get online) and a very lucid exposition of the elementary theory of value by Michael Allingham.

Probably both are out of print and I wouldn't have had much opportunity of finding them anywhere else. But worth the six-hour trip from London? Not on their own, no. I am not convinced that Hay-on-Wye will still be here in another thirty years.