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Deregulation of Shopping
AbstractThis paper studies shopping hour decisions by retail chains and independent competitors. We use a Salop-type model where retailers compete in prices and shopping hours. Our results depend significantly on efficiency differences between retail chain and independent retailer. If the efficiency difference is small, the independent retailer may choose longer shopping hours than the retail chain and may gain from deregulation at the expense of the retail chain. The opposite result emerges when the efficiency difference is large. Then, the retail chain may benefit whereas the independent retailer loses from deregulation.Keywords: Business hours, retailing, deregulation JEL-Classification: L13, L51, L81 * I thank three anonymous referees for comments that substantially improved the paper as well as Wolfgang Leininger, Justus Haucap, Vivien Procher, participants of the EEA 2008 in Milan, of the Annual Meeting of the German Economic Association 2008 in Graz and seminar participants in Dortmund and Dresden for helpful comments. Financial support by the RGS is gratefully acknowledged.
I IntroductionIn many European countries, shopping hours are regulated by the state. However, the degree of regulation varies to a large extent. For instance, in the UK, Sweden, and recently also in Germany, shopping hours are much more deregulated than in France or Norway. Even though the trend goes towards less regulation, the issue is still discussed controversially.There is a particular controversy about how deregulation impacts on competition between large retail chains and smaller, independent competitors. Smaller retailers fear that they may be harmed by a deregulation of shopping hours. The reason...