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To investigate whether attention responds rationally to strategic incentives, we experimentally implement a buyer-seller game in which a fully informed seller makes a take-it-or-leave-it offer to a buyer who faces cognitive costs to process information about the offer's value. We isolate the impact of seller strategies on buyer attention by exogenously varying the seller's outside option, which leads sellers to price high more often. We find that buyers respond by making fewer mistakes conditional on value, which suggests that buyers exert higher attentional effort in response to the increased strategic incentives for paying attention. We show that a standard model of rational inattention based on Shannon mutual information cannot fully explain this change in buyer behavior. However, we identify another class of rational inattention models consistent with this behavioral pattern. [ABSTRACT FROM AUTHOR]

This study analyzes the theoretical and practical effects of Perceived Usefulness and Perceived Ease of Use on Attitude Toward Using and Behavioral Intention to use the web-based pricing application Mersyprice, based on the Technology Acceptance Model theory. Mersyprice is a web-based application to support strategic pricing for Small and Medium Enterprises (SMEs) in the creative sector. Data was collected through an online Focus Group Discussion (FGD) using Zoom to introduce the use of Mersyprice in supporting strategic pricing for creative SMEs. Participants then completed a questionnaire using a Google form. Data analysis was carried out in 2 stages. The first stage, to answer theoretical objectives, Structural Equation Modeling was used. While the second stage, to answer practical purposes, the Analytical Hierarchy Process was used. The firststage of analysis showed that Perceived Usefulness and Perceived Ease of Use have a significant impact on Behavioral Intention to use the Mersyprice application via Attitude Toward Using it. Respondents considered that the "Ease of Use" variable was more important. The second stage of analysis revealed that 47% of creative SMEs intend to use Mersyprice, while 35% are considering using it. It can be concluded that Mersyprice is useful in supporting strategic pricing by creative sector of SMEs. For future research it is important to develop the Mersyprice in a more user friendly so that it can be used more widely. [ABSTRACT FROM AUTHOR]

Among all the elements of the marketing mix, price is the only element that brings revenues to a firm. Pricing-related research is broadly carried out in two different disciplines, namely economics and marketing. The research in economics domain is primarily theoretical. The research in marketing is multi-disciplinary and uses principles of game theory, behavioral decision theory, psychology, and social dimensions to address various pricing-related managerial decision problems. Scholars have proposed multiple theories explaining the pricing-related decision-making processes of firms. However, most of the work is descriptive in nature and does not give adequate directions to operationalize the decisions related to pricing strategy. This paper is normative in nature and provides useful insides to practitioners on how pricing strategy decisions can be made. This paper proposes a decision hierarchy that can be used to operationalize decisions related to the pricing strategy of a firm. Since the inherent components of the problem structure closely resemble the axiomatic requirements of the Analytic Hierarchy Process (AHP) which is a popular multi-criteria decision-making method, this paper also demonstrates how the AHP method can be used to solve a strategic pricing decision problem. [ABSTRACT FROM AUTHOR]

This paper investigates the strategic pricing behavior of a leader in a two-person, noncooperative game when profits depend on the purchasing response of a follower who not only reacts to changing prices instantaneously, but also builds long-lived consumption infrastructure that affects future demand. As an application of such a system, we formulate the relationship between these players in the natural gas and electricity generation industries as a bilevel problem. The leader is a natural gas producer whose objective is to maximize profit; the follower is an electric utility who solves a capacity expansion and dispatch problem with the objective of minimizing the cost of electricity generation and long-run investments. To find solutions, the bilevel problem is reformulated as a mixed-integer linear program by replacing the lower-level player's model with its Karush–Kuhn–Tucker conditions, which are necessary and sufficient for optimality here, and linearizing the upper-level player's objective function using the strong duality conditions of the lower-level problem. After parameterizing the model with publicly available data for Texas, we conduct scenario analyses through 2040, evaluating strategies of the natural gas producer under different policies regarding carbon taxes and incentives for carbon capture and storage (CCS). We then observe how the lower-level player responds to these strategies in terms of the evolution of the generation mix, added capacity, and CO 2 emissions. We also quantify the effects of strategic pricing by running scenarios where natural gas prices are fixed. Key findings include: (1) different levels of carbon tax and CCS incentive can have non-monotonic effects on the optimal natural gas price and producer profit, (2) effects of CCS incentives can spill over to technologies without CCS, and (3) omission of strategic pricing from the model not only decreases the profit for the producer but also can increase the costs for the electricity sector. • Bilevel model for interaction between natural gas producer and electric utility. • Carbon policy effects on electricity capacity mix, generation mix, and CO 2 emissions. • Effectiveness of different reformulations of bilevel programming problems. • Demonstration of how strategic natural gas pricing affects carbon policy outcomes. [ABSTRACT FROM AUTHOR]

Peer-to-peer sharing has become increasingly popular in recent years. Many digital platforms exist that allow individuals to use others' belongings part-time. These platforms explicitly mention their green credentials, as the environmental benefits of such sharing initiatives are often taken for granted. However, there is a recent empirical literature showing evidence of the contrary. We propose a theoretical framework to analyze the economic and environmental implications of peer-to-peer sharing. We present a stylized model where a monopolist supplies a product that is suitable for rent on a sharing platform. Interestingly, we find that the existence of such a platform is typically beneficial for the monopolist, especially in the long run, when she can optimally anticipate the effects of her decisions on the sharing market. Such a scenario may not be beneficial for consumers, especially for those who rent the good rather than buy it. Moreover, the existence of the sharing platform induces higher use and (under some likely conditions) larger production levels and shorter product lifespans. The combination of these three aspects contributes to a worse environmental impact with sharing, which provides a theoretical rationale for the aforementioned empirical studies. [ABSTRACT FROM AUTHOR]

We consider strategic pricing problems in which each firm chooses between a non-cooperative (individual pricing) strategy and a cooperative (price negotiation) strategy. We first analyze a monopoly supply chain involving a supplier and a retailer, and then investigate two competing supply chains each consisting of a supplier and a retailer. We find that an appropriate power allocation between the supplier and the retailer can make the two firms benefit from negotiating the wholesale and retail prices. When the supplier negotiates the wholesale price, the retailer's cooperative strategy can always induce supply chain coordination in the monopoly setting, whereas the two supply chains in the duopoly setting can be possibly coordinated only when the retailers determine their retail prices individually. In both the monopoly and duopoly settings, the wholesale price negotiation is a necessary part of the communications between supply chain members. When the supply chain competition intensifies, all firms are more likely to determine their prices individually rather than to negotiate their prices. [ABSTRACT FROM AUTHOR]

Online streaming wars are intensifying. Netflix is known as the market leader in the streaming business. However, since 2019, Netflix has been losing subscribers in the United States and is at a turning point where it needs to reassess its current position in the market. While Netflix is losing dominance, rivals Amazon Prime and Hulu continue to gain market shares. Studies from Deloitte and PricewaterhouseCoopers indicated a new shift in the streaming landscape caused by the abundance of streaming options and rising subscription costs. Recent surveys showed that consumers are excited about new streaming services, such as Disney +. Nearly two-thirds of consumers intend to terminate or downgrade one or more of their current subscriptions to make room for a new service. Moreover, it seems that consumers want ad-supported options. In Deloitte's latest Digital Media Trends survey, 65% responded that they would watch ads to eliminate or reduce subscription costs. Seventy percent of Hulu's subscribers choose its lower-priced ad-supported plan. NBC recently launched its own streaming service, Peacock, with a free ad-supported option. This opposes Netflix's brand identity of "no ads" and premium differentiation. With increasing pressure from competition and the growing risk of subscriber loss, Netflix needs to diversify its price plans. The company could try implementing the lower-priced mobile-only plan they are currently testing or plan to test in other regions. Netflix should also consider features or benefits for loyal subscribers to maintain a stronger consumer base. [ABSTRACT FROM AUTHOR]

Gray markets, also known as parallel imports, are marketplaces for trading genuine products that are diverted from authorized distribution channels. They have created fierce competition for manufacturers in many industries and each year billions of dollars worth of products are traded in these markets. Using a game-theoretic model, we analyze the impact of parallel importation on a price-setting manufacturer that serves two markets with uncertain demand. We characterize the optimal joint price and quantity decisions of the manufacturer which determine whether the manufacturer should ignore, block, or allow parallel importation. We also show that parallel importation forces the manufacturer to reduce her price gap while demand uncertainty forces her to lower prices in both markets. Moreover, we observe that parallel importation may force the manufacturer to exit the low-profit market. Through extensive numerical experiments, we explore the impact of market conditions (size and price elasticity) and product characteristics (a fashion item or a commodity) on the manufacturer's reaction to parallel importation. In addition, we provide interesting insights about the value of strategic pricing for coping with gray markets versus the uniform pricing policy that has been adopted by some companies to eliminate gray markets.

Pricing is considered the most critical as well as important factors in the pharmaceutical industry of Pakistan. There are different dynamics of strategic pricing in the pharmaceutical as the industry faces different challenges while manufacturing high-quality drugs at lower prices by applying the various sales practices. Although Pakistan is progressing well with several health-related targets being achieved ahead of time, manufacturing drugs on economies of scale remains problematic since the role of Drug Regulatory Authority Pakistan (DRAP) has not been so effective in Pakistan. This research aims to evaluate the pricing strategy of Pakistan's Pharmaceutical sector while discussing the role of DRAP. In this thesis, both qualitative and quantitative research approach has been adopted. The findings have been synthesized along with key recommendations. The study demonstrated that the drug prices strategies have significant effecting on Pakistan Pharmaceutical industry due to ineffective role of DRAP. [ABSTRACT FROM AUTHOR]

In product sales with network externalities, a Stackelberg game model is established with a new product and an existing product in the market, investigating the influence of first-mover strategy and non-strategic pricing model on the pricing, market share, and profit of an enterprise. Furthermore, the influence of network externalities and transfer costs on the strategies of latecomers is studied. Finally, the market equilibrium is analyzed. The results show that under the strategic pricing, the first entrant grabs the market share with low price and low profit in the first stage, to obtain greater network externalities in the second stage, enhance the competitiveness with latecomer, and make the total revenue greater. Given network externalities and transfer costs, the strategic behavior of the first entrant makes it harder for the later entrant to enter the market. [ABSTRACT FROM AUTHOR]

This research develops a decision support for strategic pricing and aggregate production distribution planning for a small-scale supplier intending to penetrate into a potential market engendered by a single buyer. A novel mixed integer bilevel programming model is proposed to formulate the problem in which the supplier is considered as a leader and the buyer is a follower. The proposed model subsumes the assessment of demand share against the price quotation, enabling the supplier to prepare an aggregate production distribution plan accordingly. An integer coded genetic algorithm is used to solve the model and its implementation is exhibited through a test scenario. [ABSTRACT FROM AUTHOR]

The hospital competition literature demonstrates that estimates of the effect of local market structure on competition are sensitive to geographic market definition. Our spatial lag approach effects smoothing of the explanatory variables across the discrete market boundaries. This approach results in robust estimates of the impact of market structure on hospital pricing, which can be used to estimate the full effect of changes in prices inclusive of spillovers that cascade through the neighboring hospital markets. In markets where concentration is relatively high before a proposed merger, we demonstrate that OLS estimates can lead to the wrong antitrust policy conclusion while the more conservative lag estimates do not.

We explore daily patterns of Internet pricing for the two major retailers, Amazon.com and Barnes and Noble (BN). using data on 377 books collected over a 449-day period in 2003-4. We frame this investigation in terms of a key question; How rigid are prices on the Internet? Are there reasons to suggest that prior predictions of more flexible prices on the Internet may not have been founded on the appropriate theoretical knowledge? We find that Internet retailers, in contrast with traditional firms, adjust prices any day of the week throughout the year. Yet firms' price adjustments for books occur much less frequently than daily--every 90 days on average. For most observers of Internet-based selling, this is surprising, because most expect more frequent price adjustments--based on the quality of technological environment that supports price-setting. In fact, our results show that price-change activity appears to vary by book category, from a high of one change, on average, every 61 days for best sellers to a low of one change every 184 days, on average, for steady sellers. In addition, we learned that individual firms exhibited different patterns for their price changes: Amazon changed book prices every 222 days, whereas BN changed its book prices more frequently, every 56 days on average. [ABSTRACT FROM AUTHOR]

Establishing the initial price for a new product is one of the most important decisions a firm will make. Implementing and adjusting this price over the sales cycle of the new product are crucial decisions for both its short- and long-term success. A modification of the product life cycle (PLC) concept is presented to reflect one of the many alternative price-setting strategies available to the company. After justifying and illustrating the modified PLC pricing strategy, applications and limitations are presented and discussed.

This paper examines whether real estate firms can avoid price competition when properties in the vicinity are priced by allies. An oligopoly model with differentiated products generally suggests that real estate firms engage in price competition with their spatially closest rivals. Yet, they can raise property prices when the market share of their allies increases. To test this prediction, a spatial autoregressive model with spatial autoregressive disturbances, including a share of allies in the vicinity, is estimated using data on the prices of residential condos in central Tokyo, Japan. The model prediction is supported by the empirical results. In the data set, the magnitude of the market share on property prices increases with the expansion of the size of the spatial market. [ABSTRACT FROM AUTHOR]

We present an analytical study which demonstrates that deterministic rounding policies are, in the absence of the fractional part of currency, exploited by retailers via strategic pricing. This shows that deterministic policies cannot be optimal. We then introduce fair stochastic rounding policies and demonstrate their power on the case of cash transactions in the U.S. in the potential absence of the penny. We deduce that the U.S. can safely remove both the penny and nickel from circulation provided these policies are carefully implemented. [ABSTRACT FROM AUTHOR]

At the generic commodities sales the market value of producer depends on the reaction of buyers on the price changes. The analyze shows that under certain circumstances costumers can behave to the price as the index of quality. So customers can be less sensible to the price level, than to consumer descriptions of generic products. If the level of generic products price is associated with the level of its quality, the less than they are sensible to the change of its level. In the process of the strategic pricing producers, which takes into account maximum of high or low prices, can define the degree of costumers sensitiveness to the price.

The way how we choose our pricing strategy has a significant impact on company’s success. Nowadays companies more and more adopt a new way of thinking in pricing, namely pricing for a long term period in order to bring higher profitability, to build an efficient pricing strategy. Marketers have only recently begun to focus seriously on effective pricing. These companies are the so called progressive companies. They have begun doing more than just worrying about pricing. To increase profitability many are abandoning traditional reactive pricing procedures in favor of proactive pricing, making explicit corporate decisions to change their focus to growth in top-line sales to growth in profitability. The long-term implications of price strategies are still under-researched, and managers should be aware of shifts in customer reactions that may result from frequent adoption of certain strategies. The company pricing strategy should be seen in relation to developments in the company variables, internal ones (capital strength, competencies, organizational conditions, efficiency of the work force etc.) as well as external ones (customers, competitors, the technological development etc.), adopting strategic pricing. In this paper I will present the most effective pricing strategies leading to long term profitability, and also suggest practical conditions for pricing strategies to maximize profit in the long run.

Strategic bidding problems in energy markets have been vastly studied in the literature due to their economic importance and mathematical difficulty. In this paper, we consider this problem under the natural uncertainty associated to the competitors' bids and the system demand, and formulate it as a nonconvex quadratically constrained quadratic program. In order to solve this nonconvex maximization problem or to evaluate the quality of heuristic solutions, it is important to know good upper bounds to its optimal value. With this goal, we apply a cutting plane algorithm (CPA) to solve an extended linear relaxation of the problem, which is an outer approximation of a semidefinite relaxation. Valid inequalities are added to an initial linear relaxation at each iteration of the CPA improving the bound computed, including inequalities derived from reformulation linearization techniques (RLTs) and semidefinite programing (SDP) cuts that enforce the positive semidefiniteness of the matrix variable. SDP cuts are well known to considerably delay the solution of the relaxation because of their density, and therefore, we apply a sparsification procedure for the cuts, introduced by Margot et al. in . We propose a modification to the algorithm in Margot et al. to better control the density of the SDP cuts; and after tuning the parameters of our algorithm, we show the trade-off between the bounds and the density of the cuts for test instances derived from the Brazilian electric system. [ABSTRACT FROM AUTHOR]

The goal of this paper is to better understand firms' strategic reactions to nutritional policies targeting food quality improvements and to derive optimal policies. We propose a model of product differentiation, taking into account the taste and health characteristics of products. We study how two firms react to alternative policies: an MQS policy, linear taxation of the two goods on the market, and taxation of the low-quality good. The MQS and the taxation of the low-quality product are the preferred options by a social planner. If taste is moderately important, the MQS policy is chosen by a populist and a paternalist social planner. If taste is a major component of choice, the populist planner chooses to tax the low-quality product whereas the paternalist planner prefers the MQS policy. Finally, for a paternalist social planner, an MQS-based policy always allows for higher levels of welfare than an information policy alone. [ABSTRACT FROM AUTHOR]

Gray markets, also known as parallel imports, have created fierce competition for manufacturers in many industries. We analyze the impact of parallel importation on a price-setting manufacturer that serves two markets with uncertain demand, and characterize her policy against parallel importation. We show that ignoring demand uncertainty can take a significant toll on the manufacturer's profit, highlighting the value of making price and quantity decisions jointly. We find that adjusting prices is more effective in controlling gray market activity than reducing product availability, and that parallel importation forces the manufacturer to reduce her price gap while demand uncertainty forces her to lower prices. Furthermore, we explore the impact of market conditions (such as market base, price sensitivity, and demand uncertainty) and product characteristics ('fashion' vs. 'commodity') on the manufacturer's policy towards parallel importation. We also provide managerial insights about the value of strategic decision-making by comparing the optimal policy to the uniform pricing policy that has been adopted by some companies to eliminate gray markets entirely. The comparison indicates that the value of making price and quantity decisions strategically is highest for moderately different market conditions and non-commodity products. [ABSTRACT FROM AUTHOR]

In this paper, we present the problem of strategic bidding under uncertainty in a wholesale energy market, where the economic remuneration of each electricity generator depends on the ability of its own management to submit price and quantity bids. This stochastic problem is highly nonconvex, and due to its difficulty there has been an intensive search for efficient algorithms to solve it. We present a bilevel formulation for the problem and propose a genetic algorithm for its solution, where the individual of the population represents the choice of the upper-level decision maker. For each individual, the linear programming formulation of the lower level problem is considered and its exact optimum solution is obtained in a very efficient way. Numerical experiments with instances of configurations derived from the Brazilian power system demonstrate the quality of the results obtained by the proposed algorithm. An analysis of the results is also presented for a case study comparing strategic bids to cost-based bids. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this research paper is to examine the impact of a number of variables on the adoption of strategic pricing by industrial service firms, and the effect of this adoption on company performance. Design/methodology/approach – Data were collected from 301 industrial service firms operating in seven different service sectors through a mail survey. Moreover, qualitative research through 35 in-depth interviews was conducted. Findings – The findings reveal that market orientation and market growth boost the development of strategic pricing. On the other hand, technological and market turbulence hinder this development, while the overall impact of turbulence is reduced in market-oriented firms. Finally, strategic pricing has a positive impact on company performance in both quantitative and qualitative terms. Research limitations/implications – The adoption of strategic pricing requires attention to a variety of company- and market-related factors, while this adoption can improve various aspects of company performance. The addition of other moderating and mediating effects could certainly provide additional insights. Originality/value – The current study represents one of the first attempts to empirically examine the above topics in an industrial service context. [ABSTRACT FROM AUTHOR]

• Limited clustering on whole dollars exists in VA drug prices. • Surprisingly 97.9% of drugs over $10,000 are priced down to the cents. • There are no significant variations in clustering by price levels or uncertainty. • Strategic pricing increases monotonically as prices decline. • For international drug prices, we find significant clustering on round numbers. Using drug prices from the Veteran Affairs office, we document limited clustering on whole dollars and heightened strategic pricing. Surprisingly 97.9% of drugs over $10,000 are priced down to the cents. We find no significant variations in clustering by price levels or uncertainty, rejecting the negotiation hypothesis. Strategic pricing on 01 and 99 increases monotonically as prices decline. For international drug prices, we find significant clustering on integers in Luxembourg and South Africa as price level increases, supporting the negotiation hypothesis. Our findings contribute to better negotiating drug prices to reduce healthcare costs while not discouraging innovations in drug development. [ABSTRACT FROM AUTHOR]

We examine the effects of the regulation of dual agency in residential real estate transactions, for 10,888 transactions in Long Island, New York in 2004-2007. We find that dual agency has an overall null effect on sale price, but includes two opposing forces where buyer and seller interests might be compromised. The link between dual agency and timing of sales is less clear. These findings are robust to endogeneity bias. Although it appears dual agency does cause some market distortions, our analysis yields little evidence that prohibiting dual agency in real estate will increase welfare. [ABSTRACT FROM AUTHOR]

Abstract: Few topics in the area of port economics have attracted so much attention from the side of the academic community as port pricing. The impact of such literature has been quite tangible in terms of policy development and the adoption of cost-based charging practices by many ports. Nonetheless as the port sector changes, new areas of research emerge and the academic community needs to look beyond the traditional theories to provide research that matters. This manuscript provides a review of the existing literature on port pricing with a specific focus on the literature of the last decade. In the paper the author carried out a systematic analysis of the main maritime and port economics journals and highlighted the current literature gaps and the areas that can benefit from academic attentions. Among the most interesting ones there are charging practices aiming at reducing externalities, the development of all inclusive port charges and the application of revenue management for port infrastructure utilization. [Copyright &y& Elsevier]

To make good profits, pricing is a competitive weapon of service firms. This paper is concerned with pricing strategies for services with substantial facility maintenance costs. To address the problem, a mathematical framework that incorporates service demand and facility deterioration is proposed. The facility and customers constitute a service system driven by Poisson arrivals and exponential service times. The most common log-linear customer demand and Weibull-distributed facility lifetime are also adopted. By examining the linkage between customer demand and facility deterioration in profit model, pricing policies of the service are investigated. Then analytical conditions of customer demand and facility lifetime are derived to achieve a unique optimal pricing policy. Finally, numerical examples are presented to illustrate the effects of parameter variations on the optimal pricing policy. [ABSTRACT FROM PUBLISHER]

In the evolution of pricing strategy, yield management gained a significant importance in the latest years. Revenue Management/Yield Management helps businesses selling services at the right time, to the right customer, at the right price. Revenue management can be applied to all service businesses and especially to those in which lower price units have a shorter availability. This system allows companies to personalize the price so that the customer receives exactly what he has paid for. In developing yield management systems, it is important that customer retention be included in the model. Maximizing revenue today has little value if this leads to customers switching to another company. Revenue management is becoming used more and more in the Romanian economy [ABSTRACT FROM AUTHOR]

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This study proposes a strategic pricing model for service industries that can offer customers enhanced value through lower prices while maintaining appropriate features. Based on a correlation of the categories in the refined Kano model and frequency of use of service items, the integrated model proposes that service items and attributes should be individually assessed with a view to making appropriate decisions on whether items should be deleted from service packages, offered for a separate charge, or outsourced. The model also provides guidance on prioritizing decisions regarding service items or attributes. The application of the proposed model is demonstrated in a case study of a 5-star hotel in Taiwan. The study concludes that strategic decisions on the composition of service modules can lead to appropriate pricing policies that enhance customer value and assist companies to control costs. [ABSTRACT FROM AUTHOR]

This article examines the pricing, demand (occupancy), and revenue dynamics in the U.S. hotel industry for the period 2001 to 2007. The results of this seven-year study, which compares hotels' rates to the pricing behavior of competing hotels, reveal that in both bad times (2001-2003) and good times (2004-2007), hotels that offered average daily rates above those of their direct competitors had lower comparative occupancies but higher relative revenue per available rooms (RevPAR). Based on 67,008 hotel observations, this pattern of demand and revenue behavior was consistent for hotels in all market segments (resorts and extended-stay properties were excluded from the study). Overall, the results suggest that the best way for a hotel to have higher revenue performance than its competitive set is to maintain higher rates. This finding suggests that lodging demand may be inelastic in local markets. The results of this study confirm the stance of hotel operators who resist the pressure to undercut competitors' prices. [ABSTRACT FROM AUTHOR]

Traditional airline fare management is focused on timely fare responses to competitor actions. As a result, the process is largely reactive with a focus on matching the rest of the marketplace. This paper presents a new framework for more intelligent decision making in both tactical and strategic pricing based on demand models and competitive impacts.Journal of Revenue and Pricing Management (2009) 8, 295–312. doi:10.1057/rpm.2009.12; published online 17 April 2009 [ABSTRACT FROM AUTHOR]

The frequency of occurrence of certain price points in Internet-based selling is investigated in order to determine what drives the observed regularities and variations. Theories based on consumer perceptions of price and quality images, and on rational inattention to price-endings are explored by specifying and testing empirical models for price-endings using more than 1.5 million daily observations on multiple product categories sold by 90 Internet-based retailers collected over a two-year period. The results show that a firm's on-line reputation and relative price levels affect the price-endings chosen in different product categories, and that 9-ending prices increase consumer purchases. These findings support an image theory of store quality and price. The use of 9-ending prices varies across Internet selling formats in a way consistent with differences in the rational attentiveness these channels engender in consumers. This research on the role of information technology in price-setting provides insights for marketers who wish to optimize price-setting decisions in the competitive environment of Internet retailing. [ABSTRACT FROM AUTHOR]