The theoretical literature concerning these effects is rather mixed. Some models, like the spatial-equilibrium models predict cost rises, whereas the imperfect-information balance models forecast price declines. Therefore, it is very important to check out the empirical proof. Yet, empirical evidence is rare, since most policy experiments in Western Europe are from recent data and the consequences take place in the long term. A study from the Civil Department (1991) contains information about the time before and after deregulation.
It is shown that deregulation implies a cost reduction and an increase in retail sales. Additionally, the impact on labour depends on the summation of counteracting forces. Within this paper a partial-equilibrium version for a retail store is combined with all the parameters in Sweden and also an estimate of these effects in the Netherlands is granted. With this experiment, it’s demonstrated that the overall effect on labor will be positive. In future work, there are several paths to explore. To begin with, it’s important to get more insights into the gap between the retail industry in various European countries and Sweden. In that manner, we can assess whether the proposed efficacy gain will even occur in the Netherlands.
Second, at the Swedish model the amount of opening hours will be a real time variable. It is, however, more sensible to presume that the flexibility gain is dependent upon day and time. In countries with liberalized opening hours little retail stores succeed in shifting their opening hours out of daily to the evening. But, such a feature cannot be captured by this model. Third, game-theoretic issues could be involved. A significant expansion ought to be a Stackelberg equilibrium with the large-scale retail shop as the chief. Fourth, it’s necessary to permit for exit or entrance and thus get more insights from the consequences for the construction of the retail sector. Despite the shortcomings of this strategy in this paper, there is apparently evidence that lifting existing constraints is economically profitable. The theoretical literature is quite mixed regarding the possible effects of such a policy.
With an empirical design for optimal retail behaviour, it’s shown that the financial potential may be high. It is shown that employment goes up mostly due to an increase in threshold labour. Accordingly, using the design for optimal retail behaviour an optimal principle for extending opening hours is granted. This rule implies that the possibility of longer opening hours will be large. It’s, however, shown that at the noncooperative equilibrium this potential is higher than in the cooperative equilibrium, and that large scale stores gain more from that deregulation. In countries such as the Netherlands, Belgium, and Germany, a debate about the effects is occurring with strictly opposite meanings. On the one side, some store owners see additional opening hours as an important measure to bolster their validity, on the opposite side unions along with other store owners dread for greater costs and a shake-out of small shops (e.g., IFO, 1995). Inside this discussion not just the financial consequences, but a few more ethical aspects concerning Sunday trading play an important part.