Discussion Papers

Frank Pieper

Der Postzeitungsdienst und die Wettbewerbssituation auf dem Zustellmarkt für Presseerzeugnisse
Nr. 74 / November 1991

Summary

It is a widely held opinion that low prices for the postal newspaper and periodical delivery service support diversity of opinions and freedom of the press. Today the price level for this service in the Federal Republic of Germany is the result of a bargaining process between publishers' associations and the DBP POSTDIENST.

The question arises if a mandatory postal newspaper and periodical delivery service is the only way to ensure freedom of the press and diversity of opinions or if a free market solution brings out the same results. To answer this question, this paper evaluates the structure of the market for newspaper and periodical delivery services. The structure of the relevant market is characterized by a dominant supplier (DBP) only for the delivery of periodicals. Barriers to entry are a consequence of the quality reputation of the DBP and the cost structure. Economies of scale and scope in combination with sunk costs protect the DBP from potential entrants in certain market segments. But it is likely that these handicaps, which will affect alternative delivery services (ADS), are partially compensated by inefficiencies of the DBP.

These theoretical aspects lead to some practical proposals for potential entrants. A successful strategy to enter this market must take into account the barriers to entry. As a first step, an ADS will deliver only high volume periodicals in areas with a high density of population (economies of scale being not as relevant as in other areas). After a successful entrance in this market segment an expansion towards periodicals with smaller circulation is possible. The last step could be a nationwide delivery network for all newspapers and periodicals. If this is a realistic scenario, an ADS can also ensure diversity of opinion and freedom of the press in the long run.

[Only German language version available.]

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