Two internet book vendors, Amazon and Bookdepository, have different pricing schemes: usually books are cheaper at Amazon, but Bookdepository does not charge shipping and handling fees. When you live abroad, shipping is relatively expensive, and therefore the difference is usually significant (in favor of Bookdepository). But there is one more issue that makes things a little more intricate: tax. Merchandise is taxed, shipping fees are not. In Israel, if you import goods that cost more than $50, you have to pay a 16.5% tax. Therefore, if one buy books that cost at Bookdepository more than $50 and at Amazon less than $50, then for buying at Bookdepository one needs to pay tax (and not shipping and handling fees), whereas for buying at Amazon one needs to pay shipping and handling fees (and not tax).

The decision problem that the buyer faces is clear. However, this brings up the following pricing scheme: the vendor can ask the buyer to choose whether he wants to pay for shipping and handling, in which case the price of the merchandise is lower, or he/she prefers not to pay the shipping and handling fees, but then the merchandise is more expensive. The total amount that the vendor receives is the same; the total amount that the buyer pays is different. In fact, the buyer may be willing to increase the total amount he/she pays to the vendor, if the price of the goods falls below the maximal amount that is free of tax.

One may wonder how often it happens that the books you desire cost less than $50 at Amazon and more than $50 at Bookdepository. By Murphy’s law, this will happen the next time you make an order. It happened to me in my last order of books.