Price Points and Price Rigidity

Daniel Levy (), Dongwon Lee, Haipeng (Allan) Chen (), Robert Kauffman and Mark Bergen

MPRA Paper from University Library of Munich, Germany

Abstract: We offer new evidence on the link between price points and price rigidity using two datasets. One is a large weekly transaction price dataset, covering 29 product categories over an eight-year period from a large U.S. supermarket chain. The other is from the Internet, and includes daily prices over a two-year period for 474 consumer electronic goods covering ten product categories, from 293 different Internet retailers. Across the two datasets, we find that (i) 9 is the most frequently used price-ending for the penny, dime, dollar and the ten-dollar digits, (ii) the most common price changes are in multiples of dimes, dollars, and ten-dollars, (iii) 9-ending prices are at least 24% (and as much as 73%) less likely to change in comparison to prices ending with other digits, and (iv) the average size of the price change is higher if the price ends with 9 in comparison to non-9-ending prices. This link between price points and price rigidity is robust across a wide range of prices, products, product categories, and retail formats. We offer a behavioral explanation for the findings.

Keywords: Price Point; 9-Ending Price; Price Rigidity; Rational Inattention; E-Commerce (search for similar items in EconPapers)
JEL-codes: D80 E12 E31 L16 M21 M30 (search for similar items in EconPapers)
Date: 2007-01-11
New Economics Papers: this item is included in nep-mac, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/1472/1/MPRA_paper_1472.pdf original version (application/pdf)

Related works:
Journal Article: Price Points and Price Rigidity (2011)
Journal Article: Price Points and Price Rigidity (2011)
Working Paper: Price Points and Price Rigidity (2011)
Working Paper: Price Points and Price Rigidity (2010)
Working Paper: Price Points and Price Rigidity (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1472

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().