Price Competition, Business Hours and Shopping Time Flexibility

Oz Shy and Rune Stenbacka

Economic Journal, 2008, vol. 118, issue 531, 1171-1195

Abstract: We analyse retail industries with two-stage competition in opening hours and prices. We explore the effects of consumers' shopping time flexibility by comparing bi-directional consumers with forward- or backward-oriented consumers, who can either postpone or advance their shopping, but not both. We demonstrate that retailers with longer opening hours charge higher prices and that opening hour differentiation softens price competition. We show that competition does not create incentives for retailers to expand their business hours beyond social optimum. In this respect our model does not justify restrictions on shopping hours. Copyright (C) The Author(s). Journal compilation (C) Royal Economic Society 2008.

Date: 2008
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Journal Article: Price Competition, Business Hours and Shopping Time Flexibility (2008)
Working Paper: Price Competition, Business Hours, and Shopping Time Flexibility (2004)
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