'The Real Thing': Nominal Price Rigidity of the Nickel Coke, 1886-1959

Daniel Levy, Andrew Young

Research output: Contribution to journalArticlepeer-review


We report that the price of a 6.5-oz Coca-Cola was 5c from 1886 until 1959. Thus, we are documenting a nominal price rigidity that lasted more than 70 years! The case of Coca-Cola is particularly interesting because during the 70-year period there were substantial changes in the soft drink industry as well as two World Wars, the Great Depression, and numerous regulatory interventions and lawsuits, which led to substantial changes in the Coca- Cola market conditions. The nickel price of Coke, nevertheless, remained unchanged. We find that this unusual rigidity is best explained by (1) a contract between the Company and its parent bottlers that encouraged retail price maintenance, (2) a single-coin vending machine technology, which limited the Compan's price adjustment options due to limited availability and unreliability of the existing flexible price adjustment technologies, and (3) a single-coin monetary transaction technology, which limited the Company's price adjustment options due
Original languageEnglish
Pages (from-to)765-799
JournalJournal of Money, Credit, and Banking
StatePublished - Aug 2004


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