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SSRN Electronic Journal
Article . 2006 . Peer-reviewed
Data sources: Crossref
EconStor
Research . 2006
Data sources: EconStor
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The Importance of Attractive Prices in Pricing Dynamics

Authors: Aalto-Setälä , Ville; Schindler, Robert;

The Importance of Attractive Prices in Pricing Dynamics

Abstract

Nominal rigidities have an important role in macro models used for the analysis of monetary policy. Recently, attractive prices (also known as price points) have often been referred to as one important potential explanation of nominal rigidities. An increased interest on attractive prices as an explanation for price rigidities rests on online pricing, in the context of which it has been shown that prices are rigid also on the internet, where physical costs are not important. Our empirical analyses using micro data on consumer prices in Finland indicate that a specific form of attractive prices - 9-ending prices - have a considerable effect on pricing dynamics. The results of the study show that changes to prices with 9 endings are more often decreases than are changes to prices with other endings. Price changes to 9-ending prices are also of smaller size than are changes to other endings.

Keywords

rigidity, ddc:330, 9-prices, attractive prices, rigidity; price endings; attractive prices; 9-prices, D01, E42, price endings, jel: jel:D01, jel: jel:E42

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
bronze