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Convenience pricing in online retailing: Evidence from Amazon.com

Author

Listed:
  • Régis Chenavaz

    (KEDGE Business School [Marseille], GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Joeffrey Drouard

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Octavio R. Escobar

    (PSB - Paris School of Business - HESAM - HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université)

  • Bruno Karoubi

    (UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12)

Abstract

To expedite payments, firms use convenience pricing strategies. A price is considered convenient if it can be paid with few coins. Convenient prices are well understood in offline retailing, but not online. This article fills the gap, examining an original panel dataset more than 2.5 million observations of book prices from Amazon.com. We provide empirical evidence supporting two claims. First in a static setup, more convenient prices are more likely to be set. Second in a dynamic setup, more convenient prices are more rigid. Emphasizing the role of convenience, this work sheds new light on price setting in online retailing.

Suggested Citation

  • Régis Chenavaz & Joeffrey Drouard & Octavio R. Escobar & Bruno Karoubi, 2018. "Convenience pricing in online retailing: Evidence from Amazon.com," Post-Print halshs-01683838, HAL.
    • Handle: RePEc:hal:journl:halshs-01683838
    DOI: 10.1016/j.econmod.2017.10.016
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    References listed on IDEAS

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    1. Levy, Daniel & Lee, Dongwon & Chen, Haipeng (Allan) & Kauffman, Robert J. & Bergen, Mark, 2011. "Price Points and Price Rigidity," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 93(4), pages 1417-1431.
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    Cited by:

    1. Snir, Avichai & Chen, Haipeng (Allan) & Levy, Daniel, 2022. "Zero-Ending Prices, Cognitive Convenience, and Price Rigidity," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Forthcomi, pages 1-39.
    2. Régis Chenavaz & Corina Paraschiv & Gabriel Turinici, 2021. "Dynamic Pricing of New Products in Competitive Markets: A Mean-Field Game Approach," Dynamic Games and Applications, Springer, vol. 11(3), pages 463-490, September.

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    More about this item

    Keywords

    Convenient prices Price rigidity Rational inattention Amazon.com Online retailing;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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