Working Paper: CEPR ID: DP3001
Authors: Roman Inderst; Andreas Irmen
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.
Keywords: deregulation; multidimensional product differentiation; opening hours; retailing
JEL Codes: D21; L51; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| deregulation of shopping hours (L51) | higher retail prices (D49) |
| deregulation of shopping hours (L51) | asymmetric shopping hours (L81) |
| asymmetric shopping hours (L81) | increased perceived product differentiation (L15) |
| increased perceived product differentiation (L15) | reduced price competition (D40) |
| reduced price competition (L11) | higher retail prices (D49) |