Entry and competition in the postal market: Foundations for the construction of entry scenarios

This paper presents a model of entry and imperfect competition, which is in spired by the product differentiation literature and incorporates facts per taining to the postal sector. There are two operators: incumbent and potent ial entrant. The entrant offers only one of the products (commercial mail) with a specific technology and delivers only to part of the addressees (loc ated in low cost areas). Its degree of coverage is viewed as a quality attr ibute; it affects demand and hence market share. The incumbent faces a USO while the entrant is an unregulated profit maximizing firm. To illustrate t he potential applications of our approach, we provide some numerical simula tions of entry scenarios.