Opening Hours, Store Quality, and Social Welfare

Abstract

This paper examines retailer’s strategies related to opening hours, store quality, and price. We consider a scenario in which the investment in store quality is more costly for longer opening hours. This scenario is suitable for a case where a retailer invests in quality of service such as concierge service and security service in order to increase customers’ convenience during business hours. We show that a retailer with shorter opening hours chooses higher service quality and charges lower prices. We also examine the impact of the liberalized and the regulated opening hours on social welfare. We find that the liberalized opening hours is desirable in view of social welfare because service quality and demand in the liberalized opening hours are greater than those in the regulated opening hours