Access Pricing in the Postal Sector: Theory and Simulations

Donder, Philippe De

doi:10.1007/s11151-006-0017-5

Cited by 15 publications

(12 citation statements)

References 10 publications

(19 reference statements)

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“…Total welfare decreases with bypass and is even lower than the welfare level attained in the monopoly situation under this calibration although volumes are higher than in the other cases so that the decline in welfare is relatively modest. This result confirms the similar results we have obtained in De Donder et al (2006a) andDe Donder (2006). By extension, from these papers and from the results for no bypass, the additional constraints in the "min margin" and "2 basket" cases would reduce total welfare further in the case of bypass compared with the no bypass and monopoly cases (see De Donder et al (2006b)).…”

Section: Competitive Entry Through Access and Bypasssupporting

confidence: 86%

Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures

Cremer¹,

Donder²,

Dudley³

et al. 2008

Review of Network Economics

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Postal regulators set price controls in order to simultaneously ensure the provision of the universal service, promote competition and equity. We study the associated price control procedures in a model where the universal service provider offers both a single piece product and a business mail product and where entrants offer a bulk mail product. Our results from the numerical calibration of our model indicate that in the case where entry is confined only to access, a range of procedures appear capable of meeting these objectives. However, if bypass is available these trade offs become more costly.

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Section: Competitive Entry Through Access and Bypasssupporting

confidence: 86%

Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures

Cremer¹,

Donder²,

Dudley³

et al. 2008

Review of Network Economics

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show abstract

“…This paper builds on the literature on efficient access pricing in the postal sector (De Donder (2006), Billette de Villemeur et al (2005), Tirole (1994, 2000)). In the efficient access pricing approach, the incumbent's stamp and access prices are derived by maximizing the total welfare while guaranteeing a non-negative profit for the firms.…”

Section: Introductionmentioning

confidence: 99%

Access Pricing and Entry in the Postal Sector

Bloch

Gautier

2006

SSRN Journal

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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 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.

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“…If, the entrant's price is low enough and it captures large mail volumes on the urban market and if, even the profit-maximizing prices for the incumbent are insufficient to allow break-events, then graveyard spiral takes place. 9 In this case, it is not possible to sustain the USO.…”

Section: Bypassmentioning

confidence: 99%

“…This paper builds up on the literature on efficient access pricing in the postal sector (De Donder (2006) (1994,2000)). In the efficient access pricing approach, the incumbent's stamp and access prices are derived by maximizing the total welfare while guaranteeing a non-negative profit for the firms.…”

mentioning

confidence: 99%

Access Pricing and Entry in the Postal Sector

Bloch

Gautier

2008

Review of Network Economics

View full text Add to dashboard Cite

Postal markets are open to competitor for a long time. But, with a few exceptions, the competitors of the incumbent postal operator are currently active on the upstream segments of the market -preparation, collection, outward sorting and transport of mail products. With the further steps planed 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 model will be possible for the new postal operators: (1) access: where the firm perform 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 a different impact on both the welfare and the profit of the historical operator. In particular, bypass raises severe concerns for the financing of the universal service obligations.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.

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Access Pricing in the Postal Sector: Theory and Simulations

Cited by 15 publications

References 10 publications

Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures

Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures

Access Pricing and Entry in the Postal Sector

Access Pricing and Entry in the Postal Sector

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