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24/7

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  • Miguel Flores

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Abstract

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.

Suggested Citation

  • Miguel Flores, 2011. "24/7," Discussion Papers in Economics 11/51, Department of Economics, University of Leicester.
  • Handle: RePEc:lec:leecon:11/51
    as

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    File URL: http://www.le.ac.uk/economics/research/repec/lec/leecon/dp11-51.pdf
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    References listed on IDEAS

    as
    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. Inderst, Roman & Irmen, Andreas, 2005. "Shopping hours and price competition," European Economic Review, Elsevier, vol. 49(5), pages 1105-1124, July.
    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, 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).
    5. Neven, Damien J, 1989. " Strategic Entry Deterrence: Recent Developments in the Economics of Industry," Journal of Economic Surveys, Wiley Blackwell, vol. 3(3), pages 213-233.
    6. 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.
    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 516-524, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Shopping hours competition
      by Economic Logician in Economic Logic on 2012-02-10 21:51:00

    More about this item

    Keywords

    Entry; Product Differentiation; Shopping Hours;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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    1. Economic Logic blog

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