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Will Entrants into a Liberalized Delivery Market Attract Investors

In: Regulatory and Economic Challenges in the Postal and Delivery Sector

Author

Listed:
  • Robert H. Cohen

    (U.S. Postal Rate Commission)

  • Matthew Robinson

    (U.S. Postal Rate Commission)

  • Renee Sheehy

    (U.S. Postal Rate Commission)

  • John Waller

    (U.S. Postal Rate Commission)

  • Spyros Xenakis

    (U.S. Postal Rate Commission)

Abstract

6. Conclusions Based on the results given above, we make the following conclusions concerning the potential for obtaining venture capital for an entrant delivery service. 1. It is unlikely that a realistic business plan will attract capital for an entrant delivery service in a liberalized postal market with characteristics like the U.S. market. Thus, liberalization is unlikely to trigger a graveyard spiral. 2. In order to achieve an IRR sufficient to attract venture capital, about two thirds of bulk mail would hive to be contestable. This is highly unlikely. 3. The most significant variables in a business plan are: a) the amount of contestable mail in the market served b) the rate at which the business grows to its maximum volume c) marketing and overhead expenses as a share of revenue d) the number of days of delivery per week. More scenarios can be examined with the models presented here. In addition, the models can be enchanced with new input variables for future research.

Suggested Citation

  • Robert H. Cohen & Matthew Robinson & Renee Sheehy & John Waller & Spyros Xenakis, 2005. "Will Entrants into a Liberalized Delivery Market Attract Investors," Topics in Regulatory Economics and Policy, in: Michael A. Crew & Paul R. Kleindorfer (ed.), Regulatory and Economic Challenges in the Postal and Delivery Sector, chapter 0, pages 31-51, Springer.
    • Handle: RePEc:spr:topchp:978-0-387-23637-7_2
    DOI: 10.1007/0-387-23637-6_2
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    Cited by:

    1. Joan Calzada, 2009. "Access charges under two-tier pricing," Journal of Regulatory Economics, Springer, vol. 35(3), pages 296-311, June.
    2. R. Richard Geddes, 2005. "Policy Watch: Reform of the U.S. Postal Service," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 217-232, Summer.

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