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Shopping Hours and Price Competition

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  • Inderst, Roman
  • Irmen, Andreas

Abstract

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.

Suggested Citation

  • Inderst, Roman & Irmen, Andreas, 2001. "Shopping Hours and Price Competition," CEPR Discussion Papers 3001, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3001
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    References listed on IDEAS

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    Cited by:

    1. Inderst, Roman & Irmen, Andreas, 2005. "Shopping hours and price competition," European Economic Review, Elsevier, vol. 49(5), pages 1105-1124, July.
    2. 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.
    3. Svetoslav Danchev & Christos Genakos, 2015. "Evaluating the Impact of Sunday Trading Deregulation," CEP Discussion Papers dp1336, Centre for Economic Performance, LSE.
    4. Tobias Wenzel, 2007. "Liberalization of Opening Hours with Free Entry," Ruhr Economic Papers 0013, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Raskovich, Alexander, 2007. "Ordered bargaining," International Journal of Industrial Organization, Elsevier, vol. 25(5), pages 1126-1143, October.
    6. Yamada, Mai, 2014. "Opening Hours and Quality Choices," MPRA Paper 56066, University Library of Munich, Germany.
    7. repec:zbw:rwirep:0013 is not listed on IDEAS
    8. Samuel de Haas & Daniel Herold & Jan T. Schaefer, 2017. "Shopping hours and entry - An empirical analysis of Aldi's opening hours," MAGKS Papers on Economics 201751, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    9. Alexander W. Hoffmaister, 2010. "Barriers to retail competition and prices: evidence from Spain," Oxford Economic Papers, Oxford University Press, vol. 62(2), pages 395-416, April.
    10. Tobias Wenzel, 2010. "Liberalization of Opening Hours with Free Entry," German Economic Review, Verein für Socialpolitik, vol. 11, pages 511-526, November.
    11. 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.
    12. Javier de la Ballina Ballina & Rodolfo Vázquez, 2015. "El papel de las bluelaws en los modelos de evolución de los for¬matos comerciales," Hacienda Pública Española, IEF, vol. 213(2), pages 63-82, June.
    13. Yamada, Mai, 2014. "Opening Hours, Store Quality, and Social Welfare," MPRA Paper 84172, University Library of Munich, Germany, revised 24 Jan 2018.
    14. Alexei Alexandrov, 2008. "Fat Products," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(1), pages 67-95, March.
      • Alexei Alexandrov, 2006. "Fat Products," Discussion Papers 1435, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    15. Goos, Maarten, 2004. "Sinking the blues: the impact of shop closing hours on labor and product markets," LSE Research Online Documents on Economics 19925, London School of Economics and Political Science, LSE Library.
    16. Maarten Goos, 2004. "Sinking the Blues: the Impact of Shop Closing Hours on Labor and Product Markets," CEP Discussion Papers dp0664, Centre for Economic Performance, LSE.
    17. Yamada, Mai, 2014. "Opening Hours, Store Quality, and Social Welfare," MPRA Paper 84105, University Library of Munich, Germany, revised 01 Nov 2017.
    18. Alexander Raskovich, 2006. "Ordered Bargaining," EAG Discussions Papers 200610, Department of Justice, Antitrust Division.
    19. 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.
    20. Hyewon Kim & Hiroaki Sandoh, 2015. "Socially Optimal Service hours with Special Offers," Discussion Papers in Economics and Business 15-11, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    21. Miguel Flores, 2011. "24/7," Discussion Papers in Economics 11/51, Department of Economics, University of Leicester.
    22. 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.
    23. 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.

    More about this item

    Keywords

    deregulation; multi-dimensional product differentiation; opening hours; retailing;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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