Price Regulation

Prices that end with 9, also known as psychological price points, are common, comprising about 70% of the retail prices. They are also more rigid than other prices. We take advantage of a natural experiment to document an emergence of a new price ending that has the same effects as 9-endings. In January 2014, the Israeli government passed a new regulation prohibiting the use of non 0-ending prices, bringing an end to 9-ending prices. We find that seven months after 9-ending prices have disappeared, 90-ending prices acquired the same status as 9-ending prices had before the new regulation was adopted. Thus, 90-ending prices became the new psychological price points, partially eliminating the regulation's intended effect.

This research paper examines the Australian domestic freight transport market, focusing on the decision-making process by which cargo interests and their agents make mode choice allocation decisions between land-based transport and coastal shipping. It evaluates the willingness to pay for various attributes of modal options on specific transport corridors. Such understanding lays the groundwork for being able to assess the likely impact of changes to transport prices arising from the introduction of carbon pricing or other regulatory factors. Reporting the results of a stated choice experiment, this paper identifies and quantifies freight shippers’ preferences for components of services offered by freight transport providers across modes with distinct characteristics (i.e., mixes of speed (transit time), frequency of departure, reliability (two measures) and cost) in three corridors. There are seven variables examined: frequency, transit time, freight distance, direction (headhaul/b...

We take advantage of a natural experiment to document an emergence of a new price ending that has the same effects as 9-endings. In January 2014, the Israeli parliament has passed a law prohibiting the use of non 0-ending prices. We find that one year after 9-ending prices have disappeared, 90-ending prices acquired the same status as 9-ending prices had before the law was passed. 90-ending prices became the new psychological price points. The retailers and the shoppers both reacted to the regulatory intervention optimally, which has eliminated the regulation’s intended effect.