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The Effect of Entry Regulation on Process Innovation in the Swiss Mail Industry

Author

Listed:
  • Helmut M. Dietl
  • Andreas Grütter
  • Martin Lutzenberger
  • Catia Felisberto
  • Matthias Finger

Abstract

We develop an industry specific model of price competition with product differentiation to analyze the effect of entry regulation on process innovation in the Swiss mail industry. We consider the four most prominent scenarios: regulated monopoly, end-to-end competition, worksharing without bypass, and worksharing with bypass. Based on model calibration with data from the Swiss letter market, we find that the incentives to invest in process innovation decrease with deregulation. However, even accounting for this fact, the efficiency gains from partial liberalization, i.e. worksharing, ensure an increase in social welfare.

Suggested Citation

  • Helmut M. Dietl & Andreas Grütter & Martin Lutzenberger & Catia Felisberto & Matthias Finger, 2008. "The Effect of Entry Regulation on Process Innovation in the Swiss Mail Industry," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(I), pages 37-55, March.
    • Handle: RePEc:ses:arsjes:2008-i-2
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    References listed on IDEAS

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    Cited by:

    1. Helmut M. Dietl & Urs Trinkner, 2008. "Developing Universal Postal Services in Latin America ? an Economic Perspective," Working Papers 0012, Swiss Economics, revised Nov 2008.

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    More about this item

    Keywords

    end-to-end competition; entry regulation; mail industry; process innovation; worksharing;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services

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