Zero price effect

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Definition

The zero price effect is a phenomenon whereby the demand for a good, service, or commodity is significantly greater at a price of exactly zero compared to a price even slightly greater than zero. Graphically, a zero price effect appears as a discontinuity in the demand curve at a price of zero.

The zero price effect can be viewed as a special case of the law of demand, but it also has explanations based on cognitive, psychological, and behavioral biases.

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