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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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The Review of Economics and Statistics is currently edited by Amitabh Chandra, Olivier Coibion, Bryan S. Graham, Shachar Kariv, Amit K. Khandelwal, Asim Ijaz Khwaja, Brigitte C. Madrian and Rohini Pande

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