Friday, June 18, 2010
Posted by D. Daniel Sokol
Philippe De Donder (Toulouse School of Economics), Helmuth Cremer (Toulouse School of Economics), Paul Dudley (Royal Mail Group) and Frank Rodriguez (Oxera) discuss Welfare and Pricing of Mail in a Communications Market.
ABSTRACT: We build a model where a postal incumbent offering single piece, transactional and advertising mail competes with postal entrants and with a firm offering an alternative medium. We solve for the optimal prices under various competition assumptions. We calibrate the model and provide numerical simulations in order to shed light on the impact of these assumptions on volumes and welfare levels.