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Access Pricing, Bypass and Universal Service in Post

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  • Armstrong Mark

    (University College London)

Abstract

A postal regulator typically faces two issues which make the design of efficient access pricing especially difficult and which complicate the process of liberalizing the industry. First, universal service obligations, together with the presence of fixed costs, require retail prices to depart from the underlying marginal costs of the incumbent provider. Second, competing firms may be able to bypass the incumbent's delivery network. Within a simple and stylized framework, this note analyzes how access charges should best be set in the light of these twin constraints.

Suggested Citation

  • Armstrong Mark, 2008. "Access Pricing, Bypass and Universal Service in Post," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-16, June.
    • Handle: RePEc:bpj:rneart:v:7:y:2008:i:2:n:1
    DOI: 10.2202/1446-9022.1144
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    References listed on IDEAS

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    1. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, December.
    2. De Donder, Philippe, 2006. "Access Pricing in the Postal Sector," IDEI Working Papers 319, Institut d'Économie Industrielle (IDEI), Toulouse.
    3. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-150, June.
    4. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
    5. Mark Armstrong, 2001. "Access Pricing, Bypass, and Universal Service," American Economic Review, American Economic Association, vol. 91(2), pages 297-301, May.
    6. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-150, June.
    7. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
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    Cited by:

    1. Valentiny, Pál & Kiss, Károly Miklós, 2009. "A nélkülözhetetlen eszközök értelmezése és a postai szolgáltatások [The interpretation of essential facilities and the postal services]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1001-1024.
    2. De Donder Philippe & Cremer Helmuth & Dudley Paul & Rodriguez Frank, 2011. "Welfare and Pricing of Mail in a Communications Market," Review of Network Economics, De Gruyter, vol. 10(3), pages 1-24, September.
    3. Axel Gautier & Xavier Wauthy, 2010. "Price competition under universal service obligations," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(3), pages 311-326, September.
    4. De Donder Phillippe & Cremer Helmuth & Dudley Paul & Rodriguez Frank, 2008. "Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-25, June.
    5. Markus Lang & Marc Laperrouza & Matthias Finger, 2013. "Competition Effects in a Liberalized Railway Market," Journal of Industry, Competition and Trade, Springer, vol. 13(3), pages 375-398, September.
    6. Jaag Christian, 2013. "Price Regulation and the Financing of Universal Services in Network Industries," Review of Law & Economics, De Gruyter, vol. 9(1), pages 125-150, September.
    7. Michael A. Crew & Paul R. Kleindorfer, 2010. "Access and the USO Under Full Market Opening," Chapters, in: Michael A. Crew & Paul R. Kleindorfer (ed.), Heightening Competition in the Postal and Delivery Sector, chapter 1, Edward Elgar Publishing.
    8. Xie, Li & Kong, Chun, 2023. "The social welfare effect of electricity user connection price policy reform," Applied Energy, Elsevier, vol. 346(C).

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    More about this item

    JEL classification:

    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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