The Canada Post Monopoly and Strategies for Pricing with Market Power
Canada Post Corporation has long dominated the Canadian postal market, providing essential mail and parcel services to the country's large population. This paper examines the dynamics of Canada Post's market power and analyzes the various pricing strategies it employs to maximize its profits. It also addresses the issue of monopoly control and assesses the impact of these strategies on consumers and potential competitors.
Market power is the ability of a firm to influence the price of an item in the market (Kenton, 2022). This influence can be used to create favourable conditions for the company, potentially leading to higher profits. A monopoly exists when a single
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Price Discrimination can be implemented through first-, second-, and third-degree price discrimination. First-degree Price Discrimination involves charging each customer the maximum price they are willing to pay for a given service. While it is difficult to implement in practice, advancements in data collection and analysis could help Canada Post better understand individual customers’ willingness to pay and tailor prices accordingly. Second-degree Price Discrimination involves offering different prices for different quantities of the same good or service. For example, Canada Post offers express, priority and economy delivery options with corresponding price differences. Canada Post also provides discounts for customers that ship a large volume of packages or are enrolled in their VentureOne loyalty program (Mitchell, 2014). By doing so, the organization caters to customers with unique needs and budgets, maximizing revenues across the board. Lastly, Third-degree Price Discrimination involves charging different prices to different customer segments based on factors such as location, volume, or customer type. For instance, Canada Post offers discounted prices for businesses over consumers, domestic shipping over international shipping and specific segments like non-profit organizations, educational …show more content…
In the context of Canada Post, this could entail charging a membership or subscription fee that grants customers access to discounted shipping rates. The variable fee would then be based on factors such as package weight, distance, or delivery speed. Examples that Canada Post uses include PO Box rentals and customized direct mail. Canada Post charges an annual fixed fee for renting a PO Box as well as variable fees for mail forwarding and holding. Canada Post uses its Precision Targeter tool to allow businesses to create custom direct mail campaigns for specific areas (Canada Post, n.d.). This tool has a fixed fee for access to it and an additional variable fee based on the quantity of mail sent. This strategy can help Canada Post increase its revenue by capturing consumer surplus from both the access fee and the usage
Monopoly is not just a board game people play for fun, monopolies became powerful and affected the late 1800’s and early 1900’s. Monopolies are the exclusive possession or control of the supply or trade in a commodity or service. Basically, monopolies are firms that have a lot of market power. They greatly controlled industries and played a role in the government, such as helping president President Benjamin Harrison. Monopolies dominated their own industries and were huge for the industrial period in the United States.
Using USPS to deliver packages can be up to half the cost of
We live in a society of where adding discount to a product gives it more worth just as giving the USPS coupons (Doc A). Currently the USPS takes a long time to deliver packages, but creating a more flexible schedule would put an end to other companies who take a shorter amount of time to deliver. “Without [these] drastic changes, the mail agency will face even more staggering losses (Doc C).”
For example, they reduce their delivery dates and have dropped programs. In a market where the USPS seems to admit to their Doom, they must be as Fierce as possible to prevent it. They must provide new services and incentives. Firstly, I must acknowledge strengths the USPS currently employs.
The history of Canadian public administration over the years also plays a crucial role in the system. The Canadian public administration system was initially based on the British government system but has since then transformed into a system that is unique to the country (Drysdale, p.37). That interplay evolution made an independent system for Canada, and is a “result of Canada’s political culture, and the need for public administration to adapt over time, while upholding the principles of democracy” (Drysdale, 37). Therefore, the very reason the new Canadian public administration system came to be is because of the interplay of democracy and political culture, which is arguably the greatest influence it has had. The current system in place
Explain the need for different types of mail services Mail services could include postal services such as Royal Mail, and an organisation having their own internal system or the use of a courier company. 5.3. Explain the factors to be considered when selecting mail
“The Postal Service experienced a 13 percent drop in mail volume… lost $3.8 billion” (Source C). Consumers have continuously use the Internet as their source of communication and information. With the internet use, the postal service loses an immense amount of money and the production of mail. Developing an emailing program means that the USPS can cooperate along with the technological advances in this generation. Emailing is a fast and easy way to communicate and send information to and from.
When firms have such power, they charge prices higher than they can
What is a monopoly: a monopoly is the exclusive control of a commodity or service in a particular market. For example famous monopolies include Andrew Carnegie's steel company which in the 1900s was responsible for almost all the steel production in the world and John D Rockefeller's Standard Oil company which responsible for almost all the United States production of oil. In their time these two companies were a few of the biggest ever.
Market Structure - Oligopoly Oligopoly is a market structure whereby a few number of firms owns a lion’s share in the market. This market structure is similar to monopoly, except that instead of one firm, two or more firms have control in the market. In an oligopoly, there are no upper limits to the number of firms, but the number must be nadir enough that the operations of one firm remarkably influence and affects the others (Investopedia, 2003). The Walt Disney Company is categorized under an oligopoly market structure.
In theory, the third degree price discrimination occurs when different customers pay different prices for the same goods, but each unit sold to a given group costs the same. This actually occurs in three different ways. First of all, most hotels offer discounts for children or seniors. This is done because the demand of these customer groups is more elastic. An explanation for this is simple: seniors usually have less income than adults, therefore a stay in the hotel takes up a larger share of seniors’ budget, meaning that they might not choose to purchase the good for a high price, which is affordable for adults with higher incomes.
The oligopoly market is set up in a way so that competitors can survive because each is unique and there are so few competitors that they are virtually indispensable even if some ethics atrocity
Income Level Caribbean Airlines develop pricing strategies for their services; the airline would consider the income levels of their target markers. Salary, or income level, is a good example of demographic segmentation used to introduce the airline air transportation services. For example, the airline would create packages accordingly to suit their customers pocket; some can only afford economy seating and would still like to enjoy the airline perks of meals and entertainment. These prices would be created for two types of customers, those who cannot afford the high end accommodation and those who can.
6.1.2 Price Price is the value or amount that customer pays to buy a product. For instance, for our Star Lab ice cream shop, we need to consider the cost of production of our ice cream, price of our main competitor and our potential customers demographics in order to succeed this competitive market. (C. Breidert, 2007, p.9) 6.1.2.1 Pricing Strategy Pricing strategy that can be used by our company such as penetration pricing, cost-plus pricing, value based pricing and more. But we think that market penetration pricing is the best pricing strategy to be used by our business.
This market usually exists when there is only one firm in the sector/industry. A monopoly usually has no close substitutes. For example: a local electricity company, or a railway service in a city. In order for these firms to be able to maintain their monopoly