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Price Competition, Business Hours and Shopping Time Flexibility

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  • Oz Shy
  • Rune Stenbacka

Abstract

We analyse retail industries with two-stage competition in opening hours and prices. We explore the effects of consumers' shopping time flexibility by comparing bi-directional consumers with forward- or backward-oriented consumers, who can either postpone or advance their shopping, but not both. We demonstrate that retailers with longer opening hours charge higher prices and that opening hour differentiation softens price competition. We show that competition does not create incentives for retailers to expand their business hours beyond social optimum. In this respect our model does not justify restrictions on shopping hours. Copyright (C) The Author(s). Journal compilation (C) Royal Economic Society 2008.

Suggested Citation

  • Oz Shy & Rune Stenbacka, 2008. "Price Competition, Business Hours and Shopping Time Flexibility," Economic Journal, Royal Economic Society, vol. 118(531), pages 1171-1195, August.
    • Handle: RePEc:ecj:econjl:v:118:y:2008:i:531:p:1171-1195
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    References listed on IDEAS

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    Cited by:

    1. Habte, Osmis, 2017. "Opening Hours Decision and Competition in the Motor Vehicle Inspection Market," Working Papers 2017:20, Lund University, Department of Economics.
    2. Mai Yamada, 2019. "Business Hours, Store Quality, and Social Welfare," Journal of Industry, Competition and Trade, Springer, vol. 19(3), pages 465-478, September.
    3. Paul, Annemarie, 2015. "After work shopping? Employment effects of a deregulation of shop opening hours in the German retail sector," European Economic Review, Elsevier, vol. 80(C), pages 329-353.
    4. Andre Jungmittag, 2018. "The Direct and Indirect Effects of Product Market Regulations in the Retail Trade Sector," JRC Research Reports JRC112222, Joint Research Centre.
    5. Yamada, Mai, 2014. "Opening Hours and Quality Choices," MPRA Paper 56066, University Library of Munich, Germany.
    6. Yamada, Mai, 2014. "Opening Hours, Store Quality, and Social Welfare," MPRA Paper 84172, University Library of Munich, Germany, revised 24 Jan 2018.
    7. Tobias Wenzel, 2010. "Liberalization of Opening Hours with Free Entry," German Economic Review, Verein für Socialpolitik, vol. 11, pages 511-526, November.
    8. Neutens, Tijs & Delafontaine, Matthias & Schwanen, Tim & Weghe, Nico Van de, 2012. "The relationship between opening hours and accessibility of public service delivery," Journal of Transport Geography, Elsevier, vol. 25(C), pages 128-140.
    9. Yamada, Mai, 2014. "Opening Hours, Store Quality, and Social Welfare," MPRA Paper 84105, University Library of Munich, Germany, revised 01 Nov 2017.
    10. Erhao Xie, 2018. "Inference in Games Without Nash Equilibrium: An Application to Restaurants, Competition in Opening Hours," Staff Working Papers 18-60, Bank of Canada.
    11. Miguel Flores, 2011. "24/7," Discussion Papers in Economics 11/51, Division of Economics, School of Business, University of Leicester.
    12. Tobias Wenzel, 2010. "Liberalization of Opening Hours with Free Entry," German Economic Review, Verein für Socialpolitik, vol. 11(4), pages 511-526, November.
    13. Nir Kshetri & Ralf Bebenroth, 2011. "Sources of Global Heterogeneity in Retail Spending," Discussion Paper Series DP2011-03, Research Institute for Economics & Business Administration, Kobe University.
    14. Vitor Miguel Ribeiro, 2014. "Establishing a link between behavior ecconomics and two-sided markets," FEP Working Papers 538, Universidade do Porto, Faculdade de Economia do Porto.

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    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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