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November 14, 2011

Sometimes Competition Can Be Harmful: The Case of Black Friday Sales

By Nader Habibi

Many retailers are planning to open theoro doors at 12am midnight on Black Friday this year. This is wrong. Workers and shoppers should not be forced to sacrifice their night sleep for shoping. Government must regulate the retail openning hour on Black Fridays.

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   Many politicians, business leaders and academic gurus remind us on a daily basis that competition is good and government regulations are bad. Competition encourages us to work hard and be efficient. It forces the businesses to continuously improve their products and services. This belief in virtue of competition is true in most cases but not always. Sometimes unregulated competition can be harmful to most of us. This Thanksgiving weekend we are going to witness the ugly side of unregulated competition all around us. The Black Friday shopping frenzy is being moved forward to 12am.

    It was bad enough that in recent years some retail stores opened their door at 5 am on Thanksgiving Friday. This year many are going to open their doors at 12 am midnight. This means that now people who are looking for Black Friday bargains have to start queuing up in front of large stores the night before for a chance to be among the first customers to enter the store when it opens. If this is inconvenient for shoppers it is even more difficult for the retail store workers and managers who have to be at work a few hours earlier than the opening hour.   Many of these workers might only show up at these odd hours for work because they don't want to say no to their supervisors. This irrational frenzy not only causes inconvenience for thousands of retail workers but their family and friends as well.

  The 12am shopping frenzy of Black Friday is also hard on millions of shoppers who are searching for bargains. Since the quantity of special sales items in each store are limited, shoppers who like to get their hands on one of these bargains have no alternative but to arrive at or before the opening hour of the store.   The shoppers would be much happier if all stores were prevented from opening their doors before 9am.

  The sad truth is that these retail stores are forced to open their doors at these stupid hours because of competition. Black Friday is one of the busiest shopping days in America and every retailer wants to attract as many customers as possible. Since in recent years, shoppers and bargain hunters have fallen into the habit of lining up in front of stores several hours before they open, each retailer has an incentive to open its doors earlier than others. First it was 7am, then 6am, then 5am and this year several large retail chains are opening at 12am on Black Friday.

  We can't blame the stores for trying to keep up with their competitors but this harmful competition must stop. It is up to us as citizens and up to the state and city governments to stop this madness by mandating that no retailer can open its door before 6am or even later. The fact is that as long as the opening hour is the same for all retailers the exact hour of opening will not affect their sale volume. If all retailers open at 7am they will not sell any less than if they opened their doors at 12 am. It will just be a lot more convenient for everyone. Sometimes we need the government to save us from unregulated competition. I hope those who read this article and agree with its message take a moment to email or write to their state and city representatives.



Authors Website: https://naderhabibi.blogspot.com/

Authors Bio:

Nader Habibi is the Henry J. Leir Professor of Practice in Economics of the Middle East at Brandeis University's Crown Center for Middle East Studies. His research has focused on economic and financial conditions of oil-exporting Middle Eastern countries, particularly Iran and the GCC Countries. Before joining Brandeis University in June 2007, he served as managing director of economic forecasting and risk analysis for Middle East and North Africa in Global Insight Ltd. Mr. Habibi has more than 20 years of experience in teaching, research and management positions; including vice-president for research in Iran Banking Institute (Tehran), assistant professor of economics in Bilkent University (Ankara), research fellow and ... More lecturer on political economy of Middle East at Yale University. The author of one book on bureaucratic corruption and several articles in refereed journals; he earned his Ph.D. in economics at Michigan State University. His most recent research projects include an analysis of the performance and investment strategies of Arab Sovereign Wealth Funds and a policy paper titles: "U.S.-Arab economic Relations and the Obama administration".


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