Concluding Remarks and Discussion

76

in supplying selected customer groups, e.g. business clients, some specialize in specific re-gions, and some firms specialize in selected postal operations, e.g. transportation of postal items. Moreover, the in-depth interviews confirmed that firms not only benefit from the scope economies existing between different services, e.g. between mail and parcel services, but also from scope economies existing between the postal business and other business areas. It is very striking that many firms in the postal industry are active in different business areas.

Whereas Panzar and Sherman (1993) assumed that the vertical structure of postal networks implies scope economies between different postal operations, the empirical evidence in this chapter rather indicates that single operations promote firm success.

77

do successful firms owe their success primarily to a second non-postal business area which allows them to cross-subsidize a weak postal business?

Overall, it can be concluded that the German postal sector still seems unable to provide the necessary framework for a competitive environment. Moreover, in order to be competi-tive, firms need not only to meet customers’ needs but also provide the service at a lower price, regardless of the disadvantages of natural monopoly. The existence of scale economies as a crucial success determinant could be indicated by the negative effect of providing deliv-ery services found in the econometric investigation. Numerous studies have concluded that the delivery function is a natural monopoly (see Section 3.2). The finding by Panzar (1991) and Rogerson and Takis (1993) that the vertical integration of the postal network means that the network as a whole has characteristics of a natural monopoly even in the case where only the delivery function is a natural monopoly fades into the background because of the possibil-ity of operating single postal services identified in the in-depth interviews and plant visits.

The interviews provided the first confirmation of the intuitive proposition that there are den-sity economics and that specialization in selected postal operations also constitutes a success determinant. Finally, a further aspect which must be addressed in this brief discussion is that no positive significant effects of the variables “size,” “age,” and “cooperation” could be de-tected in the econometric investigations.

Despite the satisfactory results obtained from the econometric investigation, the underly-ing dataset suffers from weaknesses. The small number of observations is one of the major ones. Although the number of observations in the dataset was limited, econometric investiga-tions were conducted in order to derive initial evidence of the analyzed issue. The small number can be justified by the fact that the relevant population, the number of licensees, is small as well. If we account for the lower number of active licensees as the relevant popula-tion, then the adequacy becomes much better. Another major weakness is manifested in the dependent variable used in the estimation models. The variable “success” is based on the as-sessment of the interviewees regarding their profit situation and is, moreover, of a qualitative nature. Moreover, the results must of course be methodically and critically evaluated with regard to causality. Thus, a few remarks on the aspects of selection bias and unobserved het-erogeneity are made subsequently. In general, a sample selection bias occurs if the dataset used for the analysis is based on a sample which is not randomly selected or if the survey

78

design has drawbacks or is poorly constructed. As mentioned in Section 3.3, the written ques-tionnaire was sent to all licensees in the German postal market. Despite the great care taken, the existence of a selection bias cannot be completely ruled out. Indeed, one such bias could be deduced from the strong competitive environment in the German postal market which in-creases the response probability of firms facing fierce competitive behavior from the market leader DPAG. The in-depth interviews conducted subsequent to the written questionnaire showed that the competitive behavior of DPAG is in fact a major issue. This in turn could mean that firms used the opportunity presented by the written questionnaire to express their opinion. The in-depth interviews provided hints of this but there is no conclusive proof, be-cause many of these firms cooperate with the DPAG. Despite these possible limitations, it has been shown that in terms of several crucial characteristics, the collected dataset adequately represents the population of all German licensees. The analyses conducted in this thesis are based on these self-collected cross-section data. This type of data is suitable for investigating differences between observation units but, in contrast to panel data, does not provide evi-dence on developments over time. Indeed, panel data facilitate the identification of causal effects because they allow us to control for time-invariant unobserved heterogeneity and ena-ble the use of further econometric models such as difference-in-difference estimations. Alt-hough panel data do not allow us to control for all sorts of unobserved heterogeneity, they can offer better insights into an industry. A particular problem is the unobserved heterogenei-ty which changes over time. In the case of the postal sector, changes in the economic power of regions over time could distort the econometric results. Moreover, because of the rele-vance of scale, scope, and density economies in the postal industry, changes in the population density should be incorporated in the estimation models.

It can be concluded from these considerations that there is a strong need for further re-search analyzing market developments after the liberalization of the German postal market.

In particular, there is a strong need for data which enable the execution of advanced econo-metric methods. Given the results of this work, the next step recommended is to make a dis-tinction between firm-specific, industry-specific, and perhaps also geographical success de-terminants. The distinction between specific success determinants could be helpful in ad-dressing policy implications in order to create the necessary framework for competition in the German postal market. Another recommended aspect for further research is the cooperative

79

behavior and strategies adopted among postal service providers and the suitability of coopera-tion for increasing regional coverage.

80

4 Competition through Cooperation? The Case of the German

Postal Market