IDEAS home Printed from https://ideas.repec.org/h/spr/topchp/978-3-030-34532-7_7.html
   My bibliography  Save this book chapter

Pricing “Competitive” Postal Products

In: The Changing Postal Environment

Author

Listed:
  • Timothy J. Brennan

    (University of Maryland Baltimore County)

Abstract

The US Postal Service (USPS) provides “market-dominant” services on an exclusive basis, e.g., first class mail, and “competitive” services in markets with rivals, e.g., parcel delivery. Rivals have long complained that USPS underprices if not cross-subsidizes its competitive offerings. I ask what prices of the monopoly and competitive services maximize net economic welfare across the market-dominant and competitive service markets. With perfect competition, USPS should charge the market price and use the profits to finance reductions in market dominant service prices. If the regulated firm faces a fringe, Ramsey rules hold based on the elasticity facing that firm, recognizing fringe supply share and elasticity. If a rival offers a differentiated product, we find, following Prieger (1996), that the regulated firm’s price in that market should exceed the Ramsey price because the rival sells too little. This price will be the target if pricing in the differentiated competitive market is simultaneous rather than sequential. Application is complicated if a publicly-owned postal operator is not profit-maximizing.

Suggested Citation

  • Timothy J. Brennan, 2020. "Pricing “Competitive” Postal Products," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), The Changing Postal Environment, pages 81-94, Springer.
    • Handle: RePEc:spr:topchp:978-3-030-34532-7_7
    DOI: 10.1007/978-3-030-34532-7_7
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:topchp:978-3-030-34532-7_7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.