I see MC curves [economics]

Dan Brown's latest book, "The Lost Symbol" sold an unprecedented 2 million copies in 2 weeks. Tim Hartford writes that part of the boost was driven (at least in the UK) by an unprecedented price war.

The Bookseller, an industry magazine, Waterstone’s offered a mere 50 per cent discount – £9.49 instead of £18.99. Tesco asked £7 and Asda £5. Asda’s book buyer celebrated “fantastic” sales, despite the fact that the store is thought to be losing £4 a copy. The old joke is made real: losing money on every sale, but making it up on volume.  The Book Depository, an online retailer, grabbed headlines with a price of £4.99 – whereupon Amazon quickly cut prices to match. These prices have prompted many people in the industry to feats of rhetorical self-flagellation. Industry insiders complained to The Bookseller about “ridiculously aggressive discounting” and asked “how can the book trade take itself seriously?”

Tim then proceeds to outline the economic thinking behind perfect competition and price wars:

Every retailer has to charge a mark-up to cover overheads, and faces a tension between the immediate pressures of competition and the need to stay in business. Every item sold, even at the tiniest mark-up, is better than no sale at all. Yet if the mark-ups are too thin, bankruptcy will not be far away.

In other words, perfect competition will drive down the price down to almost the marginal cost of the item.

It's always nice when you see theory in practice.