99 cent : price points in e-commerce


Hackl, Franz ; Kummer, Michael E. ; Winter-Ebmer, Rudolf


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URL: http://ub-madoc.bib.uni-mannheim.de/2929
URN: urn:nbn:de:bsz:180-madoc-29299
Document Type: Working paper
Year of publication: 2010
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: L11 D41 C41 ,
Subject headings (SWD): Österreich , Preiswettbewerb , Preispolitik , Verbraucherverhalten , Electronic Commerce
Keywords (English): Competitive behaviour , pricing behaviour, E-Commerce, pricing in the nines, focal pricing
Abstract: 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 prices ending in 9 - are prevalent and have significant impact on consumer demand. Moreover, these price points are sticky; neither the price-setter itself wants to change them neither the rivals do underbid these prices, if they represent the cheapest price on the market.
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Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Hackl, Franz ; Kummer, Michael E. ; Winter-Ebmer, Rudolf (2010) 99 cent : price points in e-commerce. Open Access [Working paper]
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