經濟與管理論叢(Journal of Economics and Management)  
  Volume 9, No. 2  
  July, 2013  
     
 

The Effect of .99 Price Endings on Consumer Demand: An Example of

 
 

Confounding Factors Surviving in Field Experiments

 
   
  Antonio Filippin  
 

Dipartimento di Economia, Management e Metodi Quantitativi, Università degli Studi di Milano, Italy

 
   

 

Abstract
 

The paper investigates the effect of .99 price endings on consumer demand by means of a field experiment. Results tail behind other contributions showing how .99-endings can be ineffective, casting doubts on their widespread use among retailers. When the .99-ending price is removed an increase of sales emerges from descriptive statistics as well as in a multivariate framework in which sales of the treated item are the only dependent variable. However, such a counterintuitive effect does not survive in a differences-in-differences model in which the daily sales of all the relevant substitutes are jointly analyzed. There is no evidence of any common shock during the treatment. In contrast, a different price-elasticity of demand drives the relative increase of sales of the treated item when prices of the substitutes are on average higher. Once the different reactions to price changes are taken into account, the treated item does not display significantly higher sales as compared to its substitutes when the .99-ending price is removed.

 

     
 

Keywords: price ending, field experiment, pricing

 

JEL classification: C93, D12, L11, M31

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