TY - JOUR
T1 - Round prices and price rigidity
T2 - Evidence from outlawing odd prices
AU - Ater, Itai
AU - Gerlitz, Omri
N1 - Publisher Copyright:
© 2017 Elsevier B.V.
PY - 2017/12
Y1 - 2017/12
N2 - This paper exploits a legal change in Israel that banned the use of non-zero-digit price endings (e.g., 6.99) to study the relationship between digit price endings and price rigidity. We compare the propensity of product prices to change before and after the ban, while distinguishing between products whose prices ended with a zero and products whose prices did not end with a zero digit before the ban. We find that before the ban, zero-digit price endings were more likely to change, typically upward, compared with products with non-zero digit price endings. After the legal change these differences disappeared. Overall, these findings support the Price Point Theory (Blinder, 1991).
AB - This paper exploits a legal change in Israel that banned the use of non-zero-digit price endings (e.g., 6.99) to study the relationship between digit price endings and price rigidity. We compare the propensity of product prices to change before and after the ban, while distinguishing between products whose prices ended with a zero and products whose prices did not end with a zero digit before the ban. We find that before the ban, zero-digit price endings were more likely to change, typically upward, compared with products with non-zero digit price endings. After the legal change these differences disappeared. Overall, these findings support the Price Point Theory (Blinder, 1991).
KW - 9-Ending prices
KW - Price points
KW - Price rigidity
UR - http://www.scopus.com/inward/record.url?scp=85033699657&partnerID=8YFLogxK
U2 - 10.1016/j.jebo.2017.10.003
DO - 10.1016/j.jebo.2017.10.003
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AN - SCOPUS:85033699657
SN - 0167-2681
VL - 144
SP - 188
EP - 203
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
ER -