Why is the price of books set by the manufacturer rather than the distributor?
It’s the manufacturer’s suggested retail price (MSRP); manufacturers cannot dictate the final retail price. Any manufacturer that has a catalogue or a website has a suggested retail price.

If retailers want to sell at a higher price, they just slap a price sticker over the MSRP. From what I recall, this was standard practice back in the 1970s-1980s, when inflation was more of an issue.

The point of negotiation between publishers and distributors is the discount from the MSRP the distributor gets the books at. This discount is normally fixed for the entire line of books; they are not going to negotiate prices on a per-title basis. (Some best sellers might have special negotiations.) The retailer will then set prices relative to the discount received. Since the default is to sell at the MSRP, it can save booksellers the expense of putting on their own price stickers.

Why are books different? Well, go into a bookstore and count the number of unique products on 10 feet of floor space.

Other differences include:


Unsold books can be returned, which is unusual. This was a desperation measure that publishers resorted to in the Great Depression, which they never managed to undo. This means that most books have a limited shelf life, so inflation affecting the MSRP is less of an issue.
Books can be special ordered at book stores. The order price is going to have to be the MSRP.