Price Points and Price Rigidity
57 Pages Posted: 20 Dec 2010 Last revised: 29 May 2012
Date Written: November 26, 2010
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; the average size of price change is larger for 9-ending than non-9-ending prices. We conclude that 9-ending contribute to price rigidity – at all digits from pennies to dollars, across a wide range of product categories, retail formats and retailers.
Keywords: Price Point, 9-Ending Price, Price Rigidity, Sticky Prices, Psychological Prices
JEL Classification: E31, L16, D80, M21, M30
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