Convenient Prices and Price Rigidity: Cross-Sectional Evidence

Edward Knotek

The Review of Economics and Statistics, 2011, vol. 93, issue 3, 1076-1086

Abstract: This paper provides cross‐sectional evidence of convenient prices—prices that simplify and expedite transactions, reducing the time costs from physically making a transaction. Firms may wish to set convenient prices for items that are typically purchased with cash, are sold alone or with a few similar items, and are high‐traffic transactions, that is, that require queuing or are frequently purchased. I collect a new data set and find broad support for the use of convenient prices in locations where making a rapid transaction is important. Convenience also appears to predominantly affect goods and services with above‐average price rigidity. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2011
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Working Paper: Convenient prices and price rigidity: cross-sectional evidence (2008)
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