Prices and opening hours in the retail sector: welfare effects of restrictions on opening hours

In this paper a model for price and opening hours in the retail sector is developed. Demand is modelled in the discrete choice framework. General patterns of correlation between the random utilities of shopping at various times are allowed. First, the authors study a monopolist who has to determine price and opening times in order to maximise profits. The behaviour of this monopolist is then shown to be similar to that of a monopolistic competitor in a market with many suppliers. The effects of entry and exit are studied in relation to restrictions on opening hours in a market with many identical firms. It is shown that the welfare effects of upper limits on opening hours are negative when new firms enter the market.