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Access pricing and entry in the postal sector

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Bloch, Francis and Gautier, Axel. (2008) Access pricing and entry in the postal sector. Review of Network Economics, Vol.7 (No.2). Article 3. ISSN 1446-9022

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Official URL: http://dx.doi.org/10.2202/1446-9022.1146

Abstract

In a fully liberalized postal market, two business models will be possible for a new postal operator: (1) access: where the firm performs the upstream operations and uses the incumbent’s network for final delivery and (2) bypass where the competing firm controls the entire supply chain and delivers mails with its own network. The choice between access and bypass depends on the entrant's delivery cost relative to the access price. In this paper, we derive welfare maximizing prices for the incumbent operator and we show how these prices should be re-balanced when the entry method is considered as endogenous.

Item Type:	Journal Article
Subjects:	H Social Sciences > HE Transportation and Communications
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Postal service -- Economic aspects, Delivery of goods, New business enterprises -- Finance
Journal or Publication Title:	Review of Network Economics
Publisher:	Bepress
ISSN:	1446-9022
Date:	June 2008
Volume:	Vol.7
Number:	No.2
Page Range:	Article 3
Identification Number:	10.2202/1446-9022.1146
Status:	Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Belgium. Administration des postes (AdP)
References:	Armstrong, M. (2001) “Access Pricing, Bypass and Universal Service,” American Economic Review, Papers and Proceedings, 91: 297-301. Armstrong, M., C. Doyle and J. Vickers (1996) “The Access Pricing Problem: A Synthesis,” Journal of Industrial Economics, 44: 131-150. Baumol, W., J. Panzar and R. Willig (1982) Contestable Markets and the Theory of Industry Structure. Harcourt, Brace, Jovanovich: New York. Billette de Villemeur, E., H. Cremer, B. Roy. and J. Toledano (2007) “Worksharing, Access and Bypass: the Structure of Prices in the Postal Sector,” Journal of Regulatory Economics, 32: 67-85. Cazals, C., M. de Rycke, J.P. Florens and S. Rouzaud (1997) “Scales Economies and Natural Monopolies in the Postal Delivery,” in Crew and P. Kleindorfer (ed.), Managing Changes in the Postal and Delivery Industries, Kluwer Academic Press, Boston. Cremer, H., M. De Rycke and A. Grimaud (1997) “Costs and Benefits of Universal Service Obligations in the Postal Sector,” in Crew and P. Kleindorfer (ed.), Managing Changes in the Postal and Delivery Industries, Kluwer Academic Press: Boston. Crew, M. and P. Kleindorfer (1992) The Economics of Postal Services. Kluwer Academic Publishers: Boston. Crew, M. and P. Kleindorfer (2005) “Competition, Universal Service and the Graveyard Spiral,” in M. Crew and P. Kleindorfer (ed.), Regulatory and Economics Changes in the Postal and Delivery Sector, Kluwer Academic Publishers, Boston. Crew, M. and P. Kleindorfer (2006) “Welfare Effects of Entry and Strategies for Maintaining the USO,” in M. Crew and P. Kleindorfer (ed.), Progress Toward the Liberalization of the Postal and Delivery Sector, Springer, New York. Dam, K., A. Gautier, and M. Mitra (2007) “Efficient Access Pricing and Endogenous Market Structure,” CORE DP 2007/4, Louvain-la-Neuve, Belgium. De Donder, P. (2006) “Access Pricing in the Postal Sector: Theory and Simulations,” Review of Industrial Organization, 28: 307-326. De Donder, P., H. Cremer, P. Dudley, and F. Rodriguez (2006) “Pricing and Welfare Implications of Alternative Approaches to Setting Price Controls in the Postal Sector,” in M. Crew and P. Kleindorfer (ed.), Progress Toward the Liberalization of the Postal and Delivery Sector, Springer, New York. Gautier, A. and M. Mitra (2008) “Regulation of an Open Access Essential Facility,” Economica, forthcoming. Laffont, J. J. and J. Tirole (1994) “Access Pricing and Competition,” European Economic Review, 38: 1673-1710. Laffont, J. J. and J. Tirole (2000) Competition in Telecommunications. MIT Press: Cambridge and London. Panzar, J. (2005) “Combining Liberalization and Unbundling Policies in Postal Markets,” paper presented at the 13th CRRI conference on Postal and Delivery Economics. Price Waterhouse Coopers (2006) The Impact on Universal Service of the Full Market Accomplishment of the Postal Internal Market in 2009, report to the European Commission. Rohlfs, J. (1979) “Economically-efficient Bell System Pricing,” Bell Labs Discussion Paper 138.
URI:	http://wrap.warwick.ac.uk/id/eprint/2252