Convenient Prices and Price Rigidity: Cross-Sectional Evidence

Abstract:     
This paper provides cross-sectional evidence of convenient prices -- prices that simplify and expedite transactions and thereby reduce the time costs from physically making a transaction. I propose that firms may wish to set convenient prices for items that: (1) are typically purchased with cash; (2) are sold alone or with a few similar items; and (3) are high-traffic transactions, i.e., require queuing or are purchased very frequently. I 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.

Number of Pages in PDF File: 42

Keywords: Convenient prices, price rigidity, price points, 9-ending prices

JEL Classification: E31, D11, D21, C2, L11, M31

working papers series