The Economic Contribution of the Irish Bookselling Sector

Assessment Description:

Case Study.

LO 1. Critique critical contemporary economic issues in a rigorous way, using applied concepts and theories.

LO 2. Apply economic frameworks and decision-making to specific real-world business cases.

LO 3. Evaluate and assess macroeconomic policy decisions (including competitiveness policies and labour market policies) on the business environment.

LO 4. Use macroeconomic models to think through important questions about the Irish and international economy.

1. Harvard referencing must be used.
2. The report must be typed in Times New Roman font size 12 using 1.5 line spacing. It should include word count, plagiarism declaration, and bibliography.
3. Text must be justified so that it is distributed evenly between the margins.

In 2018 the Irish Booksellers Association, commissioned a report by economist Jim Power on the ‘The Economic Contribution of the Irish Bookselling Sector”. The report examines the economic, financial, and social contribution of the Bookselling Sector to the Irish economy and to Irish society. The sector suffered significantly during the economic downturn, with a large decline in book sales and turnover in the sector.

However, over the past couple of years, sales of books have started to increase, and turnover is rising. The general mood in the sector now is one of optimism about the future. The economy is recovering and significantly, interest in physical books is rising again. In extensive interviews with various stakeholders in the sector, several issues and concerns were identified. First and foremost, all types of retailing are challenging, and margins are under pressure in the face of rising costs and a financially stretched consumer that is resistant to higher prices. The book selling sector is no different than the rest of the retail sector

 The book sector in Ireland is primarily made up of publishers, wholesalers, and bookshops themselves. These three components of the sector should be considered as part of the whole and all three are inextricably linked. The key characteristic that distinguishes Ireland’s book sector is the extent to which a significant proportion of the books sold are imported from the UK and distributed through the book wholesalers. Publishing Ireland, the Irish Book Publishers’ Association, was set up in 1970 to build a network for Irish book publishers to share their expertise and resources. The association has 61 members across the island of Ireland, consisting of trade, general and academic publishers. Nielsen figures show that in 2017, books published in Ireland were worth €30.2 million, with the top 10 publishers accounting for €23.3 million, or 77.2% of the total market.

Gross Value Added (GVA) measures the contribution to an economy of an individual producer, industry, sector or region. It is the measure of the value of goods and services produced. Specifically, it is the value of output of goods and services less intermediate consumption and is used in the calculation of GDP.

Learning Outcomes Addressed

Bookselling Ireland has 234 members’ outlets, with 146 categorized as independent bookshops and 88 as non-independent bookshops. The CSO estimates that in 2015, there were 220 enterprises in the 4-digit NACE Rev 2 Class G4761; ‘Retail Sales of Books in Specialized Stores’, with a total of 1,796 persons engaged (persons engaged includes employees, proprietors and family members).The bookselling sector is estimated to pay a gross wage bill of €35.9 million, which would translate into net wage receipts of €32.3 million. The workers who receive those wages will spend the money in the economy on goods and services, which will in turn support other jobs in the economy.

 The bookselling sector makes a significant contribution to the Irish exchequer through the employer and employee payroll taxes that it collects and pays; through business taxes; and through local authority contributions. Based on the information garnered from a number of participants of all sizes in the bookselling sector, it is estimated that the bookselling sector contributes €6.6 million to the Exchequer.

BREXIT has potentially significant implications for almost every sector of the Irish economy, and the bookselling sector is no different. It is estimated that 60% of physical books sold in Ireland are published in the UK and distributed into Ireland. The impact of Brexit on this trade in books is very uncertain and could create serious difficulties. If barriers to trade go up in the event of a ‘hard Brexit’, then this trade could be seriously disruptive and could become considerably more expensive. To date the only fallout from the vote to leave the EU in June 2016 has been seen through a significant adjustment in the exchange rate value of sterling. For example, the sterling/ euro exchange rate averaged 72.64 pence in 2015; 81.92 pence in 2016; and 87.64 pence in 2017. 22 | This represents a significant decline in the value of sterling and this currency weakness squeezes margins for booksellers.

Questions

1. Comment on market concentration in the Irish Bookselling market. (10 marks)

2) Critically evaluate the key market characteristics of the Irish Bookselling Sector, justify your selection of market structure, and discuss the competitive nature of the market. (20 marks)

3) Using an economic model, describe short-run equilibrium in this market. (10 marks)

4) Market power can be described as uniqueness of advantage, simply having the resources and capacity to make something. Discuss the Market Power Paradigm describe how it could contribute to the competitive advantage of the firm. (30 marks)

5) “To date the only fallout from the vote to leave the EU in June 2016 has been seen through a significant adjustment in the exchange rate value of sterling.” Examine the economic impact of exchange rate movements on the Irish economy. (30 marks)