Play to Win: Competition in Last-Mile Parcel Delivery

The parcel market has evolved rapidly over time, significantly altering the relationship among the players. The parcel market used to be a zero-sum game where growth in parcel delivery by one entity meant a reduction in parcel delivery by competing firms. Professor Panzar’s thereotical model shows that large parcel delivery companies are threatened by more than competition amongst each other — their real battle is over package volumes under the threat of self-delivery by large retailers.