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Shopping Hours and Price Competition

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  • Irmen, Andreas
  • Inderst, Roman

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

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

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Deregulation; Multi-dimensional product differentiation; Opening hours; Retailing;
    All these keywords.

    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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