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Competing With Mr. Postman: Business Strategies, Industry Structure, And Competitive Prices In Liberalized Letter Markets

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  • Helmut M. Dietl
  • Peter Waller

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.

Suggested Citation

  • Helmut M. Dietl & Peter Waller, 2002. "Competing With Mr. Postman: Business Strategies, Industry Structure, And Competitive Prices In Liberalized Letter Markets," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 54(2), pages 148-170, April.
  • Handle: RePEc:sbr:abstra:v:54:y:2002:i:2:p:148-170
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    Cited by:

    1. Christian Jaag & Helmut Dietl & Urs Trinkner & Oliver Furst, 2012. "Defending Mail Markets Against New Entrants: An Application of the Defender Model," Chapters,in: Multi-Modal Competition and the Future of Mail, chapter 17 Edward Elgar Publishing.
    2. Helmut M. Dietl & Urs Trinkner & Reto Bleisch, 2004. "Liberalization and Regulation of the Swiss Letter Market," Working Papers 0001, Swiss Economics, revised Jul 2005.

    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services

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