Optimal pricing of postal services under endogenously determined entry
AbstractPostal reform (liberalization) is occurring rapidly around the world, perhaps most notably in the EU where January 1, 2011 was the date of Full Market Opening (FMO). As a strategy for maintaining the Universal Service Obligation (USO) under FMO, several authors suggest that the sale of access to competitive entrants may provide the universal service provider with significant opportunities to enhance revenues. In a single postal product context, Crew and Kleindorfer (2011) provide conditions under which competitive entry via access is welfare superior to entry via bypass (the Theorem on the Superiority of Access). In this paper, we show that in the single product context, the Laspeyres price cap-based regulatory adjustment process of Vogelsang and Finsinger (1979) may be adapted to determine optimal access-inducing prices, thereby fulfilling the USO efficiently. We also discuss a number of potential problems associated with extending the Theorem on the Superiority of Access and the Vogelsang-Finsinger price capping procedure to a multiproduct context.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 32 (2012)
Issue (Month): 4 ()
Contact details of provider:
Postal liberalization; access; bypass; universal service obligation; price cap;
Find related papers by JEL classification:
- L5 - Industrial Organization - - Regulation and Industrial Policy
- L8 - Industrial Organization - - Industry Studies: Services
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- BLOCH, Francis & GAUTIER, Axel, 2006.
"Access pricing and entry in the postal sector,"
CORE Discussion Papers
2006065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- BLOCH, Francis & GAUTIER, Axel, . "Access pricing and entry in the postal sector," CORE Discussion Papers RP -2059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Francis Bloch & Axel Gautier, 2006. "Access Pricing and Entry in the Postal Sector," CREPP Working Papers 0606, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
- Francis Bloch & Axel Gautier, 2006. "Access Pricing and Entry in the Postal Sector," Working Papers halshs-00411358, HAL.
- Brennan, Timothy J, 1989. "Regulating by Capping Prices," Journal of Regulatory Economics, Springer, vol. 1(2), pages 133-47, June.
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