Should we abolish the penny?
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I think the mere fact that Kevin Federline was an opponent of the movement to get rid of the penny makes it a pretty good idea.
If the penny imposed significant costs on retail chains, wouldn’t they engineer their prices to combine with sales tax to produce a result divisible by 5? Or is there a competitive disadvantage in doing so–i.e., are consumers sensitive to < 5 cent differences in price between stores? Is there any evidence this is happening?
Many stores have already given customers the option of eliminating the penny by having “Give/Take a Penny” bowls near the register. At a couple of places I pay with cash, they don’t even bother with that: they round up my change to the nearest nickel without even asking.
At the farmer’s market where I buy most of my produce, prices are generally rounded to the nearest quarter (although some round to the dime).
Where do the copper and zinc lobbies stand on this?
“One argument I’ve heard against ditching the penny is that retailers will
round up prices.”
Questions for the economists:
1. Then why don’t they round up prices to the fraction of a penny, especially for electronic transactions? Charging an extra 1/4th of a penny would be non-trivial for big retailers.
2. Isn’t this arguing that there is no competitive pressure on price setting?
I think the penny should be abolished be cause people have no real use for it because what does it do for us exept give us pocket change and take up room in the piggy bank
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