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Shopping Hours and Price Competition

  • Inderst, Roman
  • Irmen, Andreas

This Paper develops an argument explaining why retail prices may rise in response to the deregulation of opening hours. We make this point in a model of imperfect duopolistic competition. In a deregulated market retailers view the choice of opening hours as a means to increase the degree of perceived product differentiation thus relaxing price competition. If the opportunity costs of the time spent on shopping are sufficiently high the equilibrium configuration has asymmetric shopping hours where one retailer stays open for longer than the other does. Both retailers charge higher prices than under regulation, and both are strictly better off.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3001.

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Date of creation: Oct 2001
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Handle: RePEc:cpr:ceprdp:3001
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  1. Kosfeld, Michael, 2002. "Why shops close again: An evolutionary perspective on the deregulation of shopping hours," European Economic Review, Elsevier, vol. 46(1), pages 51-72, January.
  2. Raymond Gradus, 1996. "The economic effects of extending shop opening hours," Journal of Economics, Springer, vol. 64(3), pages 247-263, October.
  3. Gerhard CLEMENZ, 1990. "Competition Via Shopping Hours: A Case For Regulation?," Vienna Economics Papers vie9005, University of Vienna, Department of Economics.
  4. Economides, Nicholas, 1989. "Quality variations and maximal variety differentiation," Regional Science and Urban Economics, Elsevier, vol. 19(1), pages 21-29, February.
  5. 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 107-14, January.
  6. Gilbert, Richard J & Matutes, Carmen, 1993. "Product Line Rivalry with Brand Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 41(3), pages 223-40, September.
  7. Paul Klemperer & A. Jorge Padilla, 1997. "Do Firms' Product Lines Include Too Many Varieties?," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 472-488, Autumn.
  8. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  9. Tanguay, Georges & Vallee, Luc & Lanoie, Paul, 1995. "Shopping Hours and Price Levels in the Retailing Industry: A Theoretical and Empirical Analysis," Economic Inquiry, Western Economic Association International, vol. 33(3), pages 516-24, July.
  10. Tabuchi, Takatoshi, 1994. "Two-stage two-dimensional spatial competition between two firms," Regional Science and Urban Economics, Elsevier, vol. 24(2), pages 207-227, April.
  11. de Meza, David, 1984. "The Fourth Commandment: Is it Pareto Efficient?," Economic Journal, Royal Economic Society, vol. 94(374), pages 379-83, June.
  12. Ben-Akiva, Moshe & de Palma, Andre & Thisse, Jacques-Francois, 1989. "Spatial competition with differentiated products," Regional Science and Urban Economics, Elsevier, vol. 19(1), pages 5-19, February.
  13. Inderst, Roman & Irmen, Andreas, 2005. "Shopping hours and price competition," European Economic Review, Elsevier, vol. 49(5), pages 1105-1124, July.
  14. Neven, D. & Thisse, J-F., 1989. "On Quality And Variety Competition," CORE Discussion Papers 1989020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. Kay, J A & Morris, C N, 1987. "The Economic Efficiency of Sunday Trading Restrictions," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 113-29, December.
  16. 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.
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