can you explain what is meant by 'price discreteness' in stock markets? I happened to read this term in some papers but I don't know how to define it
In the paper "Do Price Discreteness and Transactions Costs Affect Stock Returns? Comparing Ex-Dividend Pricing before and after Decimalization" https://www.jstor.org/stable/3648205 the authors state that " several microstructure theories argue that taxes are not the key factor affecting ex-day price behavior and that the price drop (relative to the dividend paid) can be explained by market frictions such as price discreteness and bid-ask spreads. What is exactly price discreteness?