Abstract
An experimental approach is used to examine how money denomination and the choice between or availability of coins and banknotes may influence consumers’ purchasing behaviour. Evidence shows that for small amounts of money, consumers may prefer a smaller monetary value in banknotes rather than a higher value in coins. Findings also suggest that people carrying coins are more likely to make a purchase of small value than people not carrying coins.
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Notes
In the United Kingdom, a £2 coin weighs 12 g; a £1 coin weighs 9.5 grams; a 50p coin weighs 8.0 g; a 20p coin weighs 5.0 g; a 10p coin weighs 6.5 g; a 5p coin weighs 3.25 g; a 2p coin weighs 7.12 g; a 1p coin weighs 3.56 g (Royal Mint, 2010). A £5 banknote weighs less than a gram.
Except perhaps for the £50 note, which is however not used in the experiments in this paper.
Some people may use coins on automatic vendor machines, although the use of such machines in London is extremely limited. Also, paying for on-street parking can be done by mobile phone, which may limit even further the use of coins.
Alternatively, it could reveal some degree of heterogeneity, as people carrying bags may be more organised, as suggested in Sect. 2.
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Acknowledgements
I am grateful to two anonymous referees and the Editor of the Journal for their constructive comments and helpful criticism. Thanks are also due to Irene Botosaru, Paul Dolan, Matteo Galizzi, Loukas Karabarbounis, George Kavetsos, Petros Milionis, Chris Muris, Pedro Santos Raposo, Marta Serra Garcia and Jan Stoop for comments and suggestions on earlier versions of the paper. I have also greatly benefitted from discussions with Georgina Blanco-Mancilla and Pedro Maia Gomes.
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Vandoros, S. My five pounds are not as good as yours, so I will spend them. Exp Econ 16, 546–559 (2013). https://doi.org/10.1007/s10683-013-9351-2
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DOI: https://doi.org/10.1007/s10683-013-9351-2