Convenient Prices and Price Rigidity: Cross-Sectional Evidence

Edward S. Knotek
2011 Review of Economics and Statistics  
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 (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 frequently purchased. I collect a new data set and find broad support for the use of convenient prices in
more » ... s where making a rapid transaction is important. Convenience also appears to predominantly affect goods and services with above-average price rigidity.
doi:10.1162/rest_a_00124 fatcat:dak7s53oo5ffvgurvjqme4edmy