Price Points and Price Rigidity

Levy, Daniel; Lee, Dongwon; Chen, Haipeng (Allan); Kauffman, Robert J.; Bergen, Mark E.

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Price Points and Price Rigidity

Review of Economics and Statistics, Forthcoming

Emory Law and Economics Research Paper No. 11-93

Emory Public Law Research Paper No. 11-141

Mays Business School Research Paper No. 2012-36

57 Pages Posted: 20 Dec 2010 Last revised: 29 May 2012

See all articles by Daniel Levy

Daniel Levy

Bar-Ilan University - Department of Economics; Emory University - Department of Economics; Rimini Centre for Economic Analysis; International Centre for Economic Analysis; International School of Economics at Tbilisi State University

Dongwon Lee

Korea University Business School

Haipeng (Allan) Chen

University of Kentucky - Gatton College of Business and Economics

Robert J. Kauffman

Singapore Management University; Singapore Management University - School of Information Systems

Mark E. Bergen

University of Minnesota - Carlson School of Management

There are 3 versions of this paper

Date Written: November 26, 2010

Abstract

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

Suggested Citation: Suggested Citation

Levy, Daniel and Lee, Dongwon and Chen, Haipeng (Allan) and Kauffman, Robert J. and Bergen, Mark E., Price Points and Price Rigidity (November 26, 2010). Review of Economics and Statistics, Forthcoming, Emory Law and Economics Research Paper No. 11-93, Emory Public Law Research Paper No. 11-141, Mays Business School Research Paper No. 2012-36, Available at SSRN: https://ssrn.com/abstract=1728972