99 Cent: Price points in e-commerce
AbstractSetting 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.
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Bibliographic InfoArticle provided by Elsevier in its journal Information Economics and Policy.
Volume (Year): 26 (2014)
Issue (Month): C ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505549
E-commerce; Pricing behavior; Focal prices; Price stability;
Other versions of this item:
- Franz Hackl & Michael E. Kummer & Rudolf Winter-Ebmer, 2010. "99 cent: Price Points in E-Commerce," Economics working papers 2010-02, Department of Economics, Johannes Kepler University Linz, Austria.
- Hackl, Franz & Kummer, Michael E. & Winter-Ebmer, Rudolf, 2010. "99 cent: Price points in e-commerce," ZEW Discussion Papers 10-022, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
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