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Fedex will continue to charge as much as they can to boost their profits. This move will increase their profits, making $1.50 on each of 100 million deliveries instead of $1, boosting profits from $100m to $150m

However if they were to undercut UPS and others they might be able snap up UPS business, dropping the profit to $1, but on 200 million deliveries, and thus they'll make $200m instead, you the customer will have a cheaper delivery, and everybody wins



Until it becomes a race to the bottom and UPS drop their prices as well. Then both companies suffer


> becomes a race to the bottom and UPS drop their prices

This is competition.


They're not really competing on price but on quality. They make the most money with super urgent deliveries. If they offer later pick up times or earlier guaranteed deliveries, customers will be happy to pay more. And their IT system is crucial for that.


This is how the "passing the savings on to their customers" happens.


And all consumers win. This is the beauty of capitalism, it's how it's supposed to work.

It fails when you get high barriers to entry and company colluding




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