This paper provides cross-sectional evidence of convenient prices--prices that simplify and expedite transactions and thereby reduce the time costs from physically making a transaction. I propose that firms may wish to set convenient prices for items that: (1) are typically purchased with cash; (2) are sold alone or with a few similar items; and (3) are high-traffic transactions, i.e., require queuing or are purchased very frequently. I 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.
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Paper provided by Federal Reserve Bank of Kansas City in its series Research Working Paper with number
RWP 08-04.
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Levy, Daniel & Lee, Dongwon & Chen, Allan (Haipeng) & Kauffman, Robert & Bergen, Mark, 2007.
"Price Points and Price Rigidity,"
MPRA Paper
1472, University Library of Munich, Germany.
[Downloadable!]
Other versions:
Daniel Levy & Dongwon Lee & Haipeng Chen & Robert Kauffman & Mark Bergen, 2008.
"Price Points and Price Rigidity,"
Emory Economics
0809, Department of Economics, Emory University (Atlanta).
[Downloadable!]
Daniel Levy & Dongwon Lee & Haipeng Allan Chen & Robert J. Kauffman & Mark Bergen, 2007.
"Price Points and Price Rigidity,"
Working Paper Series
04-07, Rimini Centre for Economic Analysis, revised Jul 2007.
[Downloadable!]