Diametrically opposite conclusions about the impact of blue laws on regional retail activity can be found in both the popular press and the economics literature. Most of these conclusions are based either on anecdotal evidence or on data from particular types of retail stores in a very limited geographical area.This study is based on a nation-wide analysis of the retail sector as a whole and ten subsectors in all regions of the U.S. with and without blue laws. The results suggest that Sunday closing laws do not affect the overall level of retail activity in a region in a significant manner. However, blue laws are shown to significantly affect the distribution of retail activity among certain subsectors of retail trade in a region.
Blue laws" which prohibit the Sunday sale of certain merchandise are an example of public policy regulations affecting small businesses that have been the subject of much controversy and heated debate but little research. Opponents argue that Sunday closing laws are an unnecessary impediment to retail trade and that their elimination would lead to increased retail activity. On the other hand, proponents of blue laws contend that allowing Sunday sales simply redistributes the same level of retail activity over seven days rather than six, and that the increased costs of doing business leaves both consumers and retailers (especially small retailers) worse off. BackgroundSunday closing legislation in the United States is most prevalent in the East and South, whereas states with no restrictions or limited restrictions tend to be concentrated in the Midwest and West [1]. The trend in recent years has been toward liberalization or repeal of Sunday closing laws. Since 1961, general restrictions on Sunday sales have been repealed in twelve states [6].In the public policy debate over Sunday closing legislation, small businesses tend to support blue laws and large chain stores tend to lobby for repeal. In states with Sunday closing laws there are numerous examples where owners of small shops turn in larger competing establishments that violate the blue laws [6]. If Sunday closing laws protect small retailers from the competition of larger, more efficient firms on a day of the week with the potential to result in the largest dollar-volume-per-hour for shopping center operations [4], then Sunday closing legislation may be crucial to the survival of many small retailers.Despite the controversy and debate over public policy toward Sunday sales, there has been relatively little broad-based empirical research regarding the impact of Sunday closing laws on small retailers versus large retailers. This study examines the effect of blue laws on (1) the total level of retail activity, (2) the number of retail establishments, and (3) the size of retail establishments.
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