Every few years, Quebec discusses store opening hours in the province. There are ebbs and flows to the discussion and we now seem to be at a flow point.
The discussion pits smaller stores that want shorter hours versus larger stores that want fewer restrictions on opening hours.
Rarely are consumers and workers brought into the conversation. Yet they’re the ones who stand to gain the most from removing restrictions.
Economics literature on deregulating opening hours shows a large degree of agreement among experts. For example, one study on deregulation at the state level in Germany in 2006 and 2007 found that prices fell by 0.4 per cent following the removal of restrictions on opening hours. While this may seem minor, it’s a big impact for such a small policy.
However, prices shifts alone understate the gains for consumers from deregulation. Stores don’t only compete on prices and quality – they also compete on how their services are bundled.
Some consumers appreciate how products are displayed or the ability to sample new products (like at grocery stores). Other consumers don’t want to pay for such extra services and are focused (sometimes single-mindedly) on price. And some consumers are more interested in the flexibility of the services, including opening hours.
Each entrepreneur finds the clientele niche that offers the best chance for profit.
Denying entrepreneurs all opportunities to compete also denies consumers some features of the services they desire.
In the early 1990s, Quebec undertook modest deregulation of opening hours. That attracted the attention of researchers, who found that the changes resulted in the market segmenting itself more efficiently so stores catered better to different types of consumers. While prices increased moderately, the researchers noted the increases were in large part due to the fact that consumers were willing to pay more for this greater flexibility in services.
If consumers are more likely to be satisfied on a broader definition of quality, deregulation may increase demand for services. In such a case, prices may increase but so will the demand for workers, which means greater levels of employment and higher wages. Many studies (including a one concerned with other Canadian experiences with deregulating opening hours) have found this combination of effects likely produce important gains on more than just consumer welfare.
When Quebec implemented modest reform in the early 1990s, the opposition emanated from larger stores, not small ones. Today, the reverse is true as small stores oppose reform. This switching of roles suggests store owners can change positions easily if it serves them better to restrict competition.
But regardless of who wears what hat, consumers are worse off if hours are restricted.
Vincent Geloso is a senior fellow at the Fraser Institute and visiting professor of economics at Bates College.
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