Data Management

Convenient Prices And Price Rigidity: Cross-Sectional Evidence

Date Added: Jan 2010
Format: PDF

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, i.e., require queuing or are frequently purchased. The author collects 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.