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The Effect of Entry Regulation on Process Innovation in the Swiss Mail Industry

Summary

We develop an industry specific model of price competition with product differentiation to analyze the effect of entry regulation on process innovation in the Swiss mail industry. We consider the four most prominent scenarios: Regulated monopoly, end-to-end competition, worksharing without bypass, and work-sharing with bypass. Based on model calibration with data from the Swiss letter market, we find that the incentives to invest in process innovations decrease with deregulation. However, even accounting for this fact, the efficiency gains of a partial liberalization, i.e. worksharing, ensure an increase in social welfare.

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Correspondence to Helmut M. Dietl.

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Open Access This article is distributed under the terms of the Creative Commons Attribution 2.0 International License ( https://creativecommons.org/licenses/by/2.0 ), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Dietl, H.M., Grütter, A., Lutzenberger, M. et al. The Effect of Entry Regulation on Process Innovation in the Swiss Mail Industry. Swiss J Economics Statistics 144, 37–55 (2008). https://doi.org/10.1007/BF03399248

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Keywords

  • end-to-end competition
  • entry regulation
  • mail industry
  • process innovation
  • work-sharing

JEL-Classification

  • L51
  • L87