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Old 14 November 2014, 05:00 AM
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thorny locust thorny locust is offline
Join Date: 27 April 2007
Location: Upstate NY
Posts: 9,392

Originally Posted by erwins View Post
But the way that markets work is that if it isn't worth it, a company will stop doing it, and gain a competitive advantage by not wasting money on it.
Okay. I'm probably too tired to clearly explain what I mean here, but I'm going to make a stab at it anyway.

It's not necessarily an advantage for one company to stop doing it while all the others are still doing it.

Suppose it costs you $x to stay open for one day.

Suppose the people who want to do their shopping early will spend $2x + $y.

Suppose that they will spend this money only on the first day of the shopping: whenever that first day happens to be.

If all the stores are closed on Thanksgiving, and that first day of sales is Friday, these customers will then spend that money on Friday. None of the stores have to spend the money to be open on Thanksgiving; and they'll share out the money that the early spenders spend.

If a few of the stores are open on Thanksgiving, that first day of sales is Thursday, and the stores that are open on Thursday will get that money. The stores that don't open till Friday won't get it; that money won't still be around the second day of the sale, because it was spent on the first, and most of those customers aren't going to spend more money just because the sale lasted longer. (A few of them probably will; but this may well amount to less than the cost of staying open an extra day.)

If all the stores open on Thursday, then they will all again share in that money. Each of them will make more money than the store that doesn't open the first day of the sale; and that increase will (I am positing) be more than the cost of being open the extra day.

However, none of them will take in more money than they would have if they had all waited to start the sale on Friday: because there isn't actually more money being spent; it's only the timing of the spending that's affected.

And they now all have the expense of being open both days. So, while their net profit (I'm positing; I don't have actual knowledge of their figures) is greater than it would be if they were the only store, or one of only a few stores, closed on Thursday, it's not as great as it would be if they were able to bring in that same amount of money on Friday instead: as they would if none of them opened on Thursday.

-- Basically, the first few to break ranks and open on Thursday not only make more money: they cause everyone who doesn't so open to lose money. The others have to open on Thursday to catch up; and, once they do so, those first few are no longer making the extra money that caused them to open early in the first place, because they're back to having to share the early-sales money with all the other stores. But they're now all stuck; they're still dividing the same amount of money as they would be without Thanksgiving opening, but they have to bear the costs of being open an extra day to do so. They're all worse off than they all were when the sales started a day later. But any one store that breaks ranks in the other direction loses more in sales than it gains by the closing, because by the time they open all the early money is already spent.
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