Are Blue Laws “Necessary”?

In response to my post on the Massachusetts law requiring that supermarkets close on Thanksgiving, some commenters suggested such laws served a valuable purpose insofar as they insulate stores that wish to close on holidays from competition. Without such laws, these commenters suggest, it’s only a matter of time before all stores open on holidays so as not to lose business to their competitors. In a sense, there is a “race to the bottom” that forces all market participants to adopt a suboptimal policy. From this perspective, the law does not deny “choice” as much as it privileges one choice (closing on holidays) over another (opening on holidays). In either instance, some stores (and employees and consumers) will be deprived of their choice, so the question becomes which policy option is preferrable.

This is an interesting argument — and one that is theoretically plausible. But it is also possible (and I would suggest, more likely) that the competitive pressures are not all that great. Of course staying closed when one’s competitors are open entails costs, but this does not mean one cannot compete unless one matches a competitor hour-for-hour, day-for-day. Staying open for the convenience of consumers is one of many areas in which companies will compete with one another, and all such choices involve trade-offs. Stores will only open on holidays if they believe doing so will generate enough business (or goodwill) to offset the costs. In this regard, staying open on holidays is not materially different than staying open late at night or offering additional, labor-intensive customer service.

What of the empirical evidence? Are there successful business enterprises that resist the competitive pressure to open on holidays and Sundays? Yes. William T. Bogart points out that Chick-Fil-A restaurants close on Sundays because of the religious preferences of the chain’s founder. The chain is quite successful despite this policy, even opening stores in malls and airports despite the Sunday closure policy.

This should not be a surprise. We see the same dynamic in buisness hours in various industries, but we do not see a similar “race to the bottom.” Some banks have extended hours and open on weekends, others do not. Some pharmacies are open 24 hours, others have very limited hours. The competitive dynamic does not produce a uniform policy. To the contrary, it encourages diversity to meet the diverse wnats and needs of consumers. Over all, most stores are open at those times when most consumers want to purcahse goods and services. And when it comes to holidays and Sundays, whether stores are open is more a function of consumer demand and manager preference, than anything else.

The bottom line: Were Massachusetts’ blue laws repealed, many stores would still be closed on Thanksgiving, but forgetful or non-celebrating consumers would also be able purchase necessary items and the handful of stores that remained open.

The Blue Mass Group has its own anti-Blue-law post here.

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