Why Shops Close Again: An Evolutionary Perspective on the Deregulation of Shopping Hours

M. Kosfeld

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Abstract

This paper introduces a new perspective on the deregulation of shopping hours based on ideas from evolutionary game theory. We study a retail economy where shopping hours have been deregulated recently. It is argued that first, the deregulation leads to a coordination problem between store owners and customer, and second, the `solution' to this problem depends on the specific cost structure of stores and the preferences of customers. In particular, it may happen that, even if it is profitable for both to keep stores open at night, they do not succeed in coordinating on this equilibrium. The analysis explains the observation in Germany, where shopping hours have been deregulated recently, that store owners tend to go back to the former shopping hours again. Moreover, it emphasizes the important role of advertisement campaigns as a signalling device.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages16
Volume776
Publication statusPublished - 1999

Publication series

NameFEW Research Memorandum
Volume776

Keywords

  • shopping
  • noncooperative games
  • equilibrium theory
  • deregulations

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