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Shopping Hours and Price Competition with Loyal Consumers

Author

Listed:
  • Flores Miguel

    (School of Economics, University of Surrey, Guildford GU2 7XH, UK)

  • Wenzel Tobias

    (Department of Economics, University of Bath, Claverton Down, Bath BA2 7AY, UK Düsseldorf Institute for Competition Economics (DICE), Duesseldorf, Germany)

Abstract

We study a retail market where firms compete in shopping hours and prices, and consumers have night-time or day-time preferences. In contrast to the existing literature, we introduce a market expansion effect of extending shopping hours by adding a segment of consumers (the loyal consumers) whose demand is increased if shopping hours are extended. We find that prices can increase due to shopping hours deregulation so that some consumers are worse off with deregulation. We also find that the extent of the price increase depends on the competitiveness of the retail industry.

Suggested Citation

  • Flores Miguel & Wenzel Tobias, 2016. "Shopping Hours and Price Competition with Loyal Consumers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(1), pages 393-407, January.
    • Handle: RePEc:bpj:bejeap:v:16:y:2016:i:1:p:393-407:n:15
    DOI: 10.1515/bejeap-2015-0063
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    References listed on IDEAS

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    1. Irmen, Andreas & Thisse, Jacques-Francois, 1998. "Competition in Multi-characteristics Spaces: Hotelling Was Almost Right," Journal of Economic Theory, Elsevier, vol. 78(1), pages 76-102, January.
    2. Inderst, Roman & Irmen, Andreas, 2005. "Shopping hours and price competition," European Economic Review, Elsevier, vol. 49(5), pages 1105-1124, July.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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