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  • Miguel Flores


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    This paper studies entry in a market where firms compete in shopping hours and prices. I show that an incumbent firm is able to choose its opening hours strategically to deter entry of a new firm. The potential effects of entry deterrence on social welfare depends on the degree of product differentiation. Entry deterrence increases social welfare when product differentiation is low, while it reduces social welfare when product differentiation is high. In terms of policy, the result of this model suggests that shopping hours deregulation is not always welfare enhancing.

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    Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 11/51.

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    Date of creation: Oct 2011
    Date of revision:
    Handle: RePEc:lec:leecon:11/51
    Contact details of provider: Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
    Phone: +44 (0)116 252 2887
    Fax: +44 (0)116 252 2908
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    1. Inderst, Roman & Irmen, Andreas, 2005. "Shopping hours and price competition," European Economic Review, Elsevier, vol. 49(5), pages 1105-1124, July.
    2. Giacomo Bonanno, 1985. "Product Proliferation and Entry Deterrence Revisited," STICERD - Theoretical Economics Paper Series 114, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    3. B. Curtis Eaton & Richard G. Lipsey, 1981. "Capital, Commitment, and Entry Equilibrium," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 593-604, Autumn.
    4. Neven, Damien J, 1989. " Strategic Entry Deterrence: Recent Developments in the Economics of Industry," Journal of Economic Surveys, Wiley Blackwell, vol. 3(3), pages 213-33.
    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. 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).
    7. 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.
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