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99 Cent: Price points in e-commerce

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

Information Economics and Policy, 2014, vol. 26, issue C, 12-27

Abstract: Setting prices ending in nines is a common feature of many markets for consumer products. This prevalence has been explained either by a specific image of such price points or by the exploitation of rational inattention on the part of the consumers who want to economize on the cost of information processing. We use data from an Austrian price comparison site and find a remarkable prevalence of such price setting. Prices ending with nine are also sticky: price-setters change them with a significantly lower probability; rivals underbid these prices more seldom if they represent the cheapest price on the market, and we observe higher price jumps by price leaders for these price points. Finally, we explore the impact of these price points on the consumers’ demand.

Keywords: E-commerce; Pricing behavior; Focal prices; Price stability (search for similar items in EconPapers)
Date: 2014
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Working Paper: 99 cent: Price Points in E-Commerce (2010) Downloads
Working Paper: 99 cent: Price points in e-commerce (2010) Downloads
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