99 Cent : Price Points in
نویسنده
چکیده
It has been argued that the prevalence of 99 cent prices in shops can be explained with rational consumers who disregard the rightmost digits of the price. This bounded rational behaviour leads to a Bertrand equilibrium with positive markups. We use data from an Austrian price comparison site and find results confirming this theory. We can show that price points (special prices ending in 9 or 0) are prevalent in e-commerce. These price points in particular prices ending in 9 are also sticky: pricesetters change them with a significantly lower probability; rivals underbid these price points more seldom if they represent the cheapest price on the market. Finally, we explore the impact of these price points on consumers' demand.
منابع مشابه
99 Cent: Price points in e-commerce
Basu (2006) argues that the prevalence of 99 cent prices in shops can be explained with rational consumers who disregard the rightmost digits of the price. This bounded rational behaviour leads to a Bertrand equilibrium with positive markups. We use data from an Austrian price comparison site and find results highly compatible with Basu’s theory. We can show that price points in particular pric...
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Basu (2006) argues that the prevalence of 99 cent prices in shops can be explained with rational consumers who disregard the rightmost digits of the price. This bounded rational behaviour leads to a Bertrand equilibrium with positive markups. We use data from an Austrian price comparison site and find results highly compatible with Basu’s theory. We can show that price points in particular pric...
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