Convenientprices,currency,andnominalrigidity:Theorywith evidencefromnewspaperprices

Certainitems’pricesareoftensettosimplifyandexpeditetransactions,bycoinciding with availablemonetaryunits,requiringfewpiecesofmoney,orrequiringlittlechange. In thissense,thesepricesaremore convenient thanotherproximateprices.Thispaper modelsafirmthatexplicitlyincorporatesconvenienceintoitspricingdecisions—where convenience isquantifiedbythenumberofcurrencyunitsinatransaction—and illustrates thetheoreticalbehaviorsthatcanarise.Newspapercoverpricedata empiricallysupportthetheory.Acrossabroaderrangeofgoodsandservices, convenience appearstoplayaroleineffectingabove-averagenominalpricerigidity.