99 cent: Price points in e-commerce

Franz Hackl (), Michael E. Kummer and Rudolf Winter-Ebmer

No 10-022, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Basu (2006) argues that the prevalence of 99 cent prices in shops can be explained with rational consumers who disregard the rightmost digits of the price. This bounded rational behaviour leads to a Bertrand equilibrium with positive markups. We use data from an Austrian price comparison site and find results highly compatible with Basu's theory. We can show that price points - in particular prices ending in 9 - are prevalent and have significant impact on consumer demand. Moreover, these price points are sticky; neither the price-setter itself wants to change them neither the rivals do underbid these prices, if they represent the cheapest price on the market.

Keywords: Competitive Behaviour; Pricing Behaviour; E-Commerce; Pricing in the Nines; Focal Pricing (search for similar items in EconPapers)
JEL-codes: C41 D41 L11 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-com, nep-ind and nep-mkt
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/32788/1/625712935.pdf (application/pdf)

Related works:
Journal Article: 99 Cent: Price points in e-commerce (2014)
Working Paper: 99 cent: Price Points in E-Commerce (2010)
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:zbw:zewdip:10022

Access Statistics for this paper

More papers in ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().