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Optimal Pricing and Price-Cap Regulation in the Postal Sector

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Author Info
Billette de Villemeur, Etienne, et al

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Abstract

This paper studies the optimal price structure in the postal sector when worksharing is available (e.g., for collection, sorting and transportation) and when the operator faces a break-even constraint. Users differ in opportunity and cost to engage in worksharing. We determine the optimal worksharing discount and provide sufficient conditions (on demand functions) under which it exceeds the ECPR level. Furthermore, we show that the optimal prices can be implemented through a global price cap imposed on a weighted average of the prices of all products. The appropriate weights are proportional to the market demand (evaluated at optimal prices) of the corresponding products. Copyright 2003 by Kluwer Academic Publishers

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Publisher Info
Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 24 (2003)
Issue (Month): 1 (July)
Pages: 49-62
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Handle: RePEc:kap:regeco:v:24:y:2003:i:1:p:49-62

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Web page: http://www.springerlink.com/link.asp?id=100298

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  1. Leslie Bravo Chew & Luis Fernando Gamboa, 2006. "Subsidios cruzados: el caso del sector postal," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 8(15), pages 251-268, July-Dece. [Downloadable!]
    Other versions:
  2. BERGANTINO, Angela Stefania & DE VILLEMEUR, Etienne & VINELLA, Annalisa, 2007. "Partial Regulation in Vertically Differentiated Industries," IDEI Working Papers 502, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  3. Angela S. Bergantino & Etienne Billette de Villemeur & Annalisa Vinella, 2006. "A Model of Partial Regulation in the Maritime Ferry Industry," series 0010, Dipartimento di Scienze Economiche - Università di Bari, revised Feb 2006. [Downloadable!]
  4. Valerio Gatta & Edoardo Marcucci, 2007. "Quality and Public Transport Service Contracts," Working Papers 0708, University of Urbino Carlo Bo, Department of Economics, revised 2007. [Downloadable!]
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