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Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures

Author

Listed:
  • De Donder Phillippe

    (Toulouse School of Economics (IDEI and GREMAQ))

  • Cremer Helmuth

    (Toulouse School of Economics (IDEI and GREMAQ))

  • Dudley Paul

    (Royal Mail Group)

  • Rodriguez Frank

    (Royal Mail Group)

Abstract

Postal regulators set price controls in order to simultaneously ensure the provision of the universal service, promote competition and equity. We study the associated price control procedures in a model where the universal service provider offers both a single piece product and a business mail product and where entrants offer a bulk mail product. Our results from the numerical calibration of our model indicate that in the case where entry is confined only to access, a range of procedures appear capable of meeting these objectives. However, if bypass is available these trade offs become more costly.

Suggested Citation

  • 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.
    • Handle: RePEc:bpj:rneart:v:7:y:2008:i:2:n:5
    DOI: 10.2202/1446-9022.1148
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    References listed on IDEAS

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    1. Billette de Villemeur, Etienne & Cremer, Helmuth & Roy, Bernard & Toledano, Joëlle, 2003. "Optimal Pricing and Price-Cap Regulation in the Postal Sector," Journal of Regulatory Economics, Springer, vol. 24(1), pages 49-62, July.
    2. Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
    3. De Donder, Philippe, 2006. "Access Pricing in the Postal Sector," IDEI Working Papers 319, Institut d'Économie Industrielle (IDEI), Toulouse.
    4. Armstrong Mark, 2008. "Access Pricing, Bypass and Universal Service in Post," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-16, June.
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