Competing with Mr. Postman: Business Strategies, Industry Structure and Competitive Prices in Liberalized Letter Markets

GEABA Discussion Paper No. 01-22

30 Pages Posted: 16 May 2002

See all articles by Helmut M. Dietl

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW)

Peter Waller

University of Paderborn - Faculty of Business Administration, Economics and Business Computing

Multiple version iconThere are 2 versions of this paper

Date Written: 2001

Abstract

Letter markets are still highly regulated in many countries. The European Commission, however, plans to liberalize letter markets in all member states within this decade. We describe the economic characteristics of letter markets, identify four likely regulatory scenarios, and analyze business models and entry strategies for new competitors. In particular, we predict which segments of a liberalized letter markets will be targeted by new competitors and how the incumbent will react. In order to derive our predictions, we construct a gametheoretic model for all relevant segments and regions of the German letter market. For each of the four scenarios we compute equilibrium prices, market shares, and profits for the incumbent and all entrants. Although we calibrate our model with German data our results are quite general and should apply to other countries with similar characteristics such as France, Japan, and the U.K.

JEL Classification: L11, L87

Suggested Citation

Dietl, Helmut M. and Waller, Peter, Competing with Mr. Postman: Business Strategies, Industry Structure and Competitive Prices in Liberalized Letter Markets (2001). GEABA Discussion Paper No. 01-22, Available at SSRN: https://ssrn.com/abstract=310060 or http://dx.doi.org/10.2139/ssrn.310060

Helmut M. Dietl (Contact Author)

University of Zurich - Department of Business Administration (IBW) ( email )

Hottingerstrasse 10
Plattenstrasse 14
Zurich, 8032
Switzerland

Peter Waller

University of Paderborn - Faculty of Business Administration, Economics and Business Computing ( email )

Warburger Str. 100
D-33098 Paderborn
Germany

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