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Shopping hours and bundling as an entry barrier

Author

Listed:
  • José María Chamorro Rivas

Abstract

This paper presents a simple model of regulated/deregulated shopping hours and bundling in markets where consumers have preference in shopping time. We show that, for a range of parameters, the market will change from a duopoly with an independent pricing regime when shopping hours are regulated, to a monopoly regime with bundling of products, when shopping hours are deregulated. For the rest range of parameters, market structure does not change after deregulation. Finally, deregulation tends to increase the range of parameters over which bundling is a profitable strategy. Thus, the message of this paper is that deregulation increases the strategic incentive to bundle as a mechanism to deter entry.

Suggested Citation

  • José María Chamorro Rivas, 2006. "Shopping hours and bundling as an entry barrier," Working Papers 0608, Universidade de Vigo, Departamento de Economía Aplicada.
    • Handle: RePEc:vig:wpaper:0608
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    References listed on IDEAS

    as
    1. Carbajo, Jose & de Meza, David & Seidmann, Daniel J, 1990. "A Strategic Motivation for Commodity Bundling," Journal of Industrial Economics, Wiley Blackwell, vol. 38(3), pages 283-298, March.
    2. Margaret E. Slade, 1998. "The Leverage Theory of Tying Revisited: Evidence from Newspaper Advertising," Southern Economic Journal, Southern Economic Association, vol. 65(2), pages 204-222, October.
    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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