Shopping Hours and Price Competition with Loyal Consumers

Flores Miguel () and Wenzel Tobias ()
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Flores Miguel: School of Economics, University of Surrey, Guildford GU2 7XH, UK
Wenzel Tobias: Department of Economics, University of Bath, Claverton Down, Bath BA2 7AY, UK Düsseldorf Institute for Competition Economics (DICE), Duesseldorf, Germany

The B.E. Journal of Economic Analysis & Policy, 2016, vol. 16, issue 1, 393-407

Abstract: We study a retail market where firms compete in shopping hours and prices, and consumers have night-time or day-time preferences. In contrast to the existing literature, we introduce a market expansion effect of extending shopping hours by adding a segment of consumers (the loyal consumers) whose demand is increased if shopping hours are extended. We find that prices can increase due to shopping hours deregulation so that some consumers are worse off with deregulation. We also find that the extent of the price increase depends on the competitiveness of the retail industry.

Keywords: deregulation; shopping hours; product differentiation; loyalty (search for similar items in EconPapers)
JEL-codes: D21 L22 L51 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1515/bejeap-2015-0063

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