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Why shops close again: An evolutionary perspective on the deregulation of shopping hours

  • Kosfeld, Michael

This paper introduces a new perspective on the deregulation of shopping hours based on ideas from evolutionary game theory. We study a retail economy where shopping hours have been deregulated recently. It is argued that first, the deregulation leads to a coordination problem between store owners and customer, and second, the `solution' to this problem depends on the specific cost structure of stores and the preferences of customers. In particular, it may happen that, even if it is profitable for both to keep stores open at night, they do not succeed in coordinating on this equilibrium. The analysis explains the observation in Germany, where shopping hours have been deregulated recently, that store owners tend to go back to the former shopping hours again. Moreover, it emphasizes the important role of advertisement campaigns as a signalling device.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 46 (2002)
Issue (Month): 1 (January)
Pages: 51-72

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Handle: RePEc:eee:eecrev:v:46:y:2002:i:1:p:51-72
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  16. Ferris, J Stephen, 1990. "Time, Space, and Shopping: The Regulation of Shopping Hours," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(1), pages 171-87, Spring.
  17. Ellison, Glenn, 1993. "Learning, Local Interaction, and Coordination," Econometrica, Econometric Society, vol. 61(5), pages 1047-71, September.
  18. Gerhard CLEMENZ, 1990. "Competition Via Shopping Hours: A Case For Regulation?," Vienna Economics Papers vie9005, University of Vienna, Department of Economics.
  19. Matsui, Akihiko, 1991. "Cheap-talk and cooperation in a society," Journal of Economic Theory, Elsevier, vol. 54(2), pages 245-258, August.
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