Price Points and Price Rigidity

• Main Authors: LEVY, Daniel, LEE, Dongwon, LEE, Haipeng (Allen), Kauffman, Robert J., Bergen, Mark
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2011
• Subjects: Computer Sciences; Management Information Systems; Numerical Analysis and Scientific Computing
• Online Access: https://ink.library.smu.edu.sg/sis_research/2186; https://ink.library.smu.edu.sg/context/sis_research/article/3186/viewcontent/rest_a_00178.pdf
• Institution: Singapore Management University

We study the link between price points and price rigidity using two data sets: 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; and the average size of price change is larger for 9-ending than non-9- ending prices. We conclude that 9-ending contributes to price rigidity from penny to dollar digits and across a wide range of product categories, retail formats, and retailers.