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Why shops close again: An evolutionary perspective on the deregulation of shopping hours


Kosfeld, M (2002). Why shops close again: An evolutionary perspective on the deregulation of shopping hours. European Economic Review, 46(1):51-72.

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 customers, 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 extended shopping hours are Pareto efficient, stores and customers 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.

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 customers, 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 extended shopping hours are Pareto efficient, stores and customers 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.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Deregulation, Shopping hours, Equilibrium selection, Coordination
Language:English
Date:January 2002
Deposited On:11 Feb 2008 12:29
Last Modified:05 Apr 2016 12:22
Publisher:Elsevier
ISSN:0014-2921
Publisher DOI:https://doi.org/10.1016/S0014-2921(01)00092-7

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