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

Schmalenbach Business Review, Vol. 54, April 2002

23 Pages Posted: 27 Jun 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

Abstract

Letter markets are still highly regulated in most countries. Some countries, such as those of the European Union, plan to liberalize letter markets within this decade. Competition will provide many new challenges and opportunities for established and new players. In this paper we analyze business strategies and the resulting industry structure in liberalized letter markets. We describe the economic characteristics of the industry and identify business models for new competitors. To predict the industry structure, we construct a game-theoretic model, which takes into account the relevant segments and geographic differences of the letter market. The model allows us to compute equilibrium prices, market shares, and profits for the incumbent and entrants. We can thus assess the different strategies. Although we calibrate our model with German data, our results are general and can be applied to other countries with similar characteristics, such as France, the U.K., and to some extent even the U.S.

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. Schmalenbach Business Review, Vol. 54, April 2002, Available at SSRN: https://ssrn.com/abstract=315723 or http://dx.doi.org/10.2139/ssrn.315723

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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