Faculty of Economics and Business Administration Publications Database

Shopping Hours and Price Competition

Irmen, Andreas
Volume: 49
Number: 5
Pages: 1105 - 1124
Month: July
ISSN-Print: 0014-2921
Link External Source: Online Version
Year: 2005
Keywords: Opening hours; Retailing; Deregulation; Multi-dimensional product differentiation
Abstract: This paper develops an argument 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 consumers’ preference intensity for time is sufficiently high the equilibrium configuration has asymmetric shopping hours where one retailer stays open for longer than the other. Both retailers charge higher prices than under regulation, and both are strictly better off.