The Regulation Level of Business Hours

Using the model based on Inderst and Irmen (2005), we analyze retail industries with competition in business hours and prices and examine the desirable degree of business hours regulation for policy makers who have objectives to enhance the welfare. We find that the strict regulation of business hours, which business hours are regulated in all regions, enhances the welfare only when the transportation cost parameter is relatively large. This implies that, contrary to some previous studies, the deregulation is not always welfare enhancing. Although some countries have regulated business hours only in some regions, such partial regulation might worsen the welfare because a retail store located at deregulated regions charges a higher price.