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Focusing on the universal express service market, this paper introduces a cooperative mechanism between China Post and private express companies. To investigate whether this cooperative mechanism works, the authors develop a pricing model for the express service market in three different scenarios, i.e., China Post monopolizes the remote area market, competes with a private express company, and cooperatively provides service to the private company. Comparison between the three different scenarios shows that the proposed cooperative mechanism will benefit both firms. The authors also introduce a revenue sharing contract to coordinate the system, and investigate the optimal regulation price.

A Cooperative Mechanism Between China Post and Private Express Firm for Remote Area Express Market