Convenient Prices and Price Rigidity: Cross-Sectional Evidence
- 1 August 2011
- journal article
- Published by MIT Press in The Review of Economics and Statistics
- Vol. 93 (3), 1076-1086
- https://doi.org/10.1162/rest_a_00124
Abstract
This paper provides cross‐sectional evidence of convenient prices—prices that simplify and expedite transactions, reducing the time costs from physically making a transaction. Firms may wish to set convenient prices for items that are typically purchased with cash, are sold alone or with a few similar items, and are high‐traffic transactions, that is, that require queuing or are frequently purchased. I collect a new data set and 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. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.Keywords
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