Open AccessPrice Competition, Business Hours and Shopping Time Flexibility *
Author(s) -
Shy Oz,
Stenbacka Rune
Publication year - 2008
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/j.1468-0297.2008.02165.x
Subject(s) - competition (biology) , flexibility (engineering) , history , media studies , economic history , economics , management , sociology , ecology , biology
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.