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Price Points and Price Rigidity

  • Daniel Levy

    ()

    (Department of Economics, Bar Ilan University and RCEA)

  • Dongwon Lee

    (Korea University)

  • Haipeng (Allan) Chen

    (Texas A&M University)

  • Robert J. Kauffman

    (Arizona State University)

  • Mark Bergen

    (University of Minnesota)

We study the link between price points and price rigidity, using two datasets: weekly scanner data, and Internet data. We find that: “9” is the most frequent ending for the penny, dime, dollar and ten-dollar digits; the most common price changes are those that keep the price endings at “9”; 9-ending prices are less likely to change than non-9-ending prices; and the average size of price change is larger for 9-ending than non-9-ending prices. We conclude that 9-ending contributes to price rigidity from penny to dollar digits, and across a wide range of product categories, retail formats and retailers.

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Paper provided by Bar-Ilan University, Department of Economics in its series Working Papers with number 2010-21.

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Date of creation: Dec 2010
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Handle: RePEc:biu:wpaper:2010-21
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