Is Tullock correct about Sunday closing laws?

Abstract

In a recently reprinted essay, Gordon Tullock (1980: 671-678) develops the thesis that the acquisition by producers of government sanctioned monopoly privileges rarely leads to higher long run profitability. The gains are short-lived because the monopoly rents often are dissipated. 'The successors to the original beneficiaries will not normally make exceptional profits, but, unfortunately, they usually will be injured by cancellation of the original gift' (p. 671). Tullock refers to this as 'the transitional gains trap.' Tullock's hypothesisBy way of illustration, Tullock cites, among others, the example of Sunday closing laws. His hypothesis is straightforward. The imposition of a Sunday closing law reduces the capacity of (say) grocery stores to serve a given number of customers with the same degree of convenience, e.g., check out lines are longer, shelves can be surveyed and stocked less frequently. More importantly, closing a store one day a week reduces operating costs by more than it reduces sales revenue. Certain costs, such as for labor and energy, decline while daily sales volume increases as approximately the same number of customers must do their food shopping during six, rather than seven, days a week. Further, since all stores are governed by the same law, no single store need fear losing business to competitors because it is closed on Sunday. Thus profit margins increase -the gains. However, positive economic profits attract entry. New stores will be built as grocers compete for customers by attempting to restore the original level of shopping convenience. As Tullock concludes, 'Eventually, then, we will have a situation in which there are more stores than there were before and the return on all stores is, once again, normal' (p. 674) -the trap. The purpose of this note is to provide a test of Tullock's hypothesis that, ceteris

The Church vs the Mall: What Happens When Religion Faces Increased Secular Competition?

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“…Other published empirical analyses of blue laws are limited to a particular retail subsector, such as grocery stores (Tullock, 1975(Tullock, , 1980Moorehouse, 1984); to particular types of stores such as shopping center chain stores (Chain Store Age Executive, 1970) or small retailers (Barnes and Chopoorian, 1987); to the profiles of Sunday shoppers (Barnes, 1984); or to the reasons blue laws are enacted or repealed (Price and Yandle, 1987). None of these studies adequately addresses the question of the impact of blue laws on the overall level of regional retail activity.…”

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“…It is argued, for example, that regulations favour small shops, while deregulations favor large shops (Clemenz, 1990;Morrison and Newman, 1983), that deregulations may lead to a general decrease in prices (Clemenz, 1990), or rather to a decrease at small stores and an increase at large stores (Tanguay et al, 1995). Other articles comparing social benefits and social losses of a deregulation include de Meza (1984), Moorhouse (1984), Kay and Morris (1987), Clemenz (1994), and Ferris (1990). A recent paper that rationalizes consumers' opposition towards a deregulation of shopping hours is Thum and Weichenrieder (1997).…”