'Dinkies' and Housewives: The Regulation of Shopping Hours

The idea of deregulating shopping hours brings strong opposition from many groups in the society. Surprisingly, even many consumers oppose deregulation. The paper rationalizes this behavior by considering heterogeneous consumers who differ in their earnings abilities. If a majority of families has two income earners, long opening hours become essential and the regulation of shopping hours tends to be eliminated. If most families are single income households, the regulation may be imposed in order to keep prices low. Taking the repercussions on the labor supply decision into account, multiple equilibria can be explained. Correspondence address: Marcel Thum Alfons Weichenrieder University of Munich Woodrow Wilson School Schackstrasse 4 Princeton University 80539 Munich Princeton, NJ 08544 Germany U.S.A. [email protected] [email protected] I. THE POLITICAL ECONOMY OF SHOPPING HOUR REGULATION While in recent years some countries have followed the path of liberalization and deregulation, most European countries such as Austria, Belgium, Denmark, Germany, Finland, Italy, and Norway still impose severe restrictions on shopping hours.1 In many countries there is significant opposition to deregulation which comes not only from small shop owners who fear a change in the market structure or from labor unions which fear the loss of influence because the number of non-unionized workers would increase. Surprisingly, many consumers also oppose deregulation. New opportunities offered by longer shopping hours, such as shopping at the most convenient times, searching for the lowest price or best quality, or shopping with the whole family in less crowded facilities, are often only welcomed by a minority. According to a large German survey (Munz, Täger and Ludwig 1995), for example, more than 56 percent of all consumers have no interest at all in liberalized shopping hours.2 Obviously, for many consumers who oppose deregulation, the fear that prices might rise with longer opening hours outweighs the advantages of more liberal shopping hours. Indeed, some 50 percent of German consumers expect that higher prices will follow deregulation (Munz, Täger and Vogler-Ludwig 1995, p. 16) and there is empirical evidence for Canada that larger retail stores have in fact increased their prices after deregulation (Tanguay, Valée and Lanoie 1995). This paper wants to shed some light on the political economy of divergent consumer interests and on the regulation which results from this. We argue that restricted shopping hours may help maintain the low consumer prices which are in the interest of single income households with plenty of time for day time shopping. However, this comes at the expense of households with two income earners who, for obvious reasons, have a higher preference for unrestricted shopping hours. In an extension of our basic model we consider the repercussion of regulation on households' labor market participation. Since expected shopping hour 1 European countries where there are almost no limitations are the UK, Portugal and Sweden. 2 In Switzerland, the consumers' opposition against longer shopping hours became evident in a series of referenda. A new labor law that (among other things) proposed a liberalization of shopping hours was rejected by a majority of 67% of the voters in December 1996 (Tagesanzeiger, December 2, 1996). In June 1996, three cantons put proposals for liberalized shopping hours to the vote all of them were rejected, in Freiburg by 78%, in Winterthur by 71%, and in St. Gallen by 65% of the voters (Schaffhauser Nachrichten, June 10, 1996). Since referenda are known for fostering discussion and for enhancing the dissipation of information among citizens (cf. Frey, 1994) these high figures suggest that better informed citizens are not less hostile towards liberalization.