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Pricing in competitive two-sided mail markets

Christian Jaag & Urs Trinkner

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In our contribution, we analyze whether the traditional pricing concept
(sender pays principle) remains dominant in competitive postal markets. We divide the competitive postal market into a processing and delivery part, where a postal operator faces two kinds of customers: senders in the former and receivers in the latter part of the market. Based on the contributions by Laffont, Rey and Tirole (1998), Rochet and Tirole (2003), Armstrong (2006), and Panzar (2006) we develop a theoretical model with consumers' platform choice between two operators competing in linear upstream and two-part downstream prices and being interconnected by a symmetric access regime to P.O. boxes. Thereby, we extend the analysis of a delivery flat rate by Felisberto et al. (2006) and Friedli et al. (2006) to a competitive environment and assess optimum pricing schemes in market equilibrium.
   
type book chapter (English)
   
keywords Pricing, Two-Sided Market, Liberalization
   
book title Competition and Regulation in the Postal and Delivery
date of appearance 2008
publisher Edward Elgar (Northampton)
series title Advances in Regulatory Economics
ISBN 978 1 84720 507 0
page(s) 136-149
citation Jaag, C., & Trinkner, U. (2008). Pricing in competitive two-sided mail markets. In Competition and Regulation in the Postal and Delivery (pp. 136-149). Northampton: Edward Elgar. - ISBN 978 1 84720 507 0.