Message in a model

The European Commission has decided to liberalise the postal sector gradually, rather than sparking off a "big bang" with a competitive free-for-all. This cautious approach, also adopted in the UK, reflects the view that existing postal operators may not be able to maintain a universal service at a uniform price in the face of sudden competition. In a paper presented at a postal conference in Potsdam, Germany, Frontier staff have developed a model of the economics of entry into the postal sector, and used it to help identify the conditions under which it may be possible for rival operators and incumbents to co-exist, without the latter facing financial meltdown.

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