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Business Hours, Store Quality, and Social Welfare

Author

Listed:
  • Mai Yamada

    (Showa Women’s University)

Abstract

This paper examines retail strategies related to business hours, store quality, and price. We consider a cost regime in which quality investments are more costly for extended business hours. The cost regime captures additional investment costs for customer and security service during late hours. This is a novel feature in the existing literature on retail competition in business hours and prices. We show that a retailer with shorter business hours chooses higher store quality and charges lower prices. We also find that the liberalization of business hours is desirable in view of social welfare because store quality and demand under liberalized business hours are greater than those under regulated business hours.

Suggested Citation

  • Mai Yamada, 2019. "Business Hours, Store Quality, and Social Welfare," Journal of Industry, Competition and Trade, Springer, vol. 19(3), pages 465-478, September.
    • Handle: RePEc:kap:jincot:v:19:y:2019:i:3:d:10.1007_s10842-019-00299-z
    DOI: 10.1007/s10842-019-00299-z
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    References listed on IDEAS

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    1. Morrison, Steven A & Newman, Robert J, 1983. "Hours of Operation Restrictions and Competition among Retail Firms," Economic Inquiry, Western Economic Association International, vol. 21(1), pages 107-114, January.
    2. 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.
    3. Inderst, Roman & Irmen, Andreas, 2005. "Shopping hours and price competition," European Economic Review, Elsevier, vol. 49(5), pages 1105-1124, July.
    4. Tobias Wenzel, 2011. "Deregulation of Shopping Hours: The Impact on Independent Retailers and Chain Stores," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 145-166, March.
    5. Shy, Oz & Stenbacka, Rune, 2006. "Service hours with asymmetric distributions of ideal service time," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 763-771, July.
    6. Danchev, Svetoslav & Genakos, Christos, 2015. "Evaluating the impact of Sunday trading deregulation," LSE Research Online Documents on Economics 61156, London School of Economics and Political Science, LSE Library.
    7. Clemenz, Gerhard, 1990. "Non-sequential consumer search and the consequences of a deregulation of trading hours," European Economic Review, Elsevier, vol. 34(7), pages 1323-1337, November.
    8. Jacobsen, Joyce P. & Kooreman, Peter, 2005. "Timing constraints and the allocation of time: The effects of changing shopping hours regulations in The Netherlands," European Economic Review, Elsevier, vol. 49(1), pages 9-27, January.
    9. Kay, J A & Morris, C N, 1987. "The Economic Efficiency of Sunday Trading Restrictions," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 113-129, December.
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    11. Karthik Reddy, 2012. "Price Effects Of Shopping Hours Regulation: Evidence From Germany," Economic Affairs, Wiley Blackwell, vol. 32(1), pages 48-54, February.
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    Cited by:

    1. Samuel Haas & Daniel Herold & Jan T. Schäfer, 2020. "Shopping Hours and Entry - an Empirical Analysis of Aldi’s Opening Hours," Journal of Industry, Competition and Trade, Springer, vol. 20(1), pages 139-156, March.
    2. Yamada, Mai, 2020. "The Regulation Level of Business Hours," MPRA Paper 101392, University Library of Munich, Germany.

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    More about this item

    Keywords

    Business hours; Location; Multi-dimensional product differentiation; Duopoly;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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