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Franchise Bidding for Postal Services in Rural Regions


  • Borrmann Jörg

    () (University of Vienna)


In this paper, we develop a franchise bidding mechanism for postal services under the Universal Service Obligation (USO) in rural areas. For the collection and delivery of mail on rural routes and for small town counter operations, monopoly franchises are awarded. Deficits caused by the USO are balanced by transfers between the government and the incumbent postal operator, i.e. the franchiser. We analyze the efficiency properties of the mechanism and discuss the drawbacks when extending the mechanism to urban areas.

Suggested Citation

  • Borrmann Jörg, 2004. "Franchise Bidding for Postal Services in Rural Regions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-22, April.
  • Handle: RePEc:bpj:bejeap:v:topics.4:y:2004:i:1:n:10

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    References listed on IDEAS

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    Cited by:

    1. Joan Calzada & Christian Jaag & Urs Trinkner, 2010. "Universal service auctions in liberalized postal markets," Chapters,in: Heightening Competition in the Postal and Delivery Sector, chapter 17 Edward Elgar Publishing.
    2. Carlos Costa, 2012. "On the Use of Reverse Auctions to Designate Universal Postal Service Providers," Chapters,in: Multi-Modal Competition and the Future of Mail, chapter 21 Edward Elgar Publishing.

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