Liberalization of Opening Hours with Free Entry
This paper studies competition in prices and opening hours in a model with free entry. It is shown that under free competition market failures arise: Entry is excessive and opening hours are under-provided. The larger the demand elasticity, the larger market failures are going to be. Restrictions on opening hours aggravate this failure. We analyze the impact of a liberalization of opening hours. The model predicts that prices will remain constant in the short run but increase in the long run. Concentration in the retail sector will rise. Additionally, employment in the retail sector increases. Copyright 2010 The Author. German Economic Review 2010 Verein für Socialpolitik.
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Volume (Year): 11 (2010)
Issue (Month): (November)
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