Access pricing and entry in the postal sector

Francis Bloch and Axel Gautier ()

No 2006065, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Postal markets have been open to competition for a long time. But, with a few exceptions, the competitors of the incumbent postal operator are active on the upstream segments of the market -preparation, collection, outward sorting and transport of mail products. With the further steps planned in the liberalization process, there are new opportunities to extend competition to the downstream segments of the market -the delivery of mails. In the future, two business models will be possible for the new postal operators: (1) access: where the firm performs the upstream operations and uses the incumbent's delivery network and (2) bypass where the competing firm controls the entire supply chain and delivers mails with its own delivery network. These two options have different impacts on welfare and the profit of the incumbent operator. The choice between access and bypass depends on the entrant's delivery cost relative to the cost of buying access to the incumbent operator (the access price). In this paper, we derive optimal -welfare maximizing- stamp and access prices for the incumbent operator when these prices have an impact on the delivery method chosen by the entrant. We show how prices should be re-balanced when the entry method is considered as endogenous i.e. affected by the incumbent's prices.

Keywords: access; bypass; postal sector (search for similar items in EconPapers)
JEL-codes: L51 L87 (search for similar items in EconPapers)
Date: 2006-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Access pricing and entry in the postal sector (2009)
Journal Article: Access Pricing and Entry in the Postal Sector (2008)
Working Paper: Acces pricing and entry in the postal sector (2008)
Working Paper: Access Pricing and Entry in the Postal Sector (2006)
Working Paper: Access Pricing and Entry in the Postal Sector (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2006065

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