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Worksharing and Access Discounts in the Postal Sector with Asymmetric Information

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  • Joan Calzada

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Abstract

This paper analyzes the optimal worksharing and access amounts granted to mailers and entrants in a liberalized postal sector when there is asymmetric information about the Post Office’s (PO) costs. I show that when the regulator is unable to ascertain which part of the total cost of sorting has to be attributed to each sorting facility, the optimal “access discount” given to entrants is set in a pro-competitive way. This facilitates the entry of firms that are less efficient than the PO. However, the optimal “worksharing discount” may prevent the entry of mailers that are more efficient than the PO. Copyright Springer Science+Business Media, Inc. 2006

Suggested Citation

  • Joan Calzada, 2006. "Worksharing and Access Discounts in the Postal Sector with Asymmetric Information," Journal of Regulatory Economics, Springer, vol. 29(1), pages 69-102, January.
  • Handle: RePEc:kap:regeco:v:29:y:2006:i:1:p:69-102
    DOI: 10.1007/s11149-005-5126-9
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    References listed on IDEAS

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    1. Laffont, Jean-Jacques & Tirole, Jean, 1994. "Access pricing and competition," European Economic Review, Elsevier, vol. 38(9), pages 1673-1710, December.
    2. 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.
    3. De Fraja, Gianni, 1999. "Regulation and access pricing with asymmetric information," European Economic Review, Elsevier, vol. 43(1), pages 109-134, January.
    4. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    5. Caillaud, Bernard, 1990. "Regulation, competition, and asymmetric information," Journal of Economic Theory, Elsevier, vol. 52(1), pages 87-110, October.
    6. David Sappington & J. Sidak, 2003. "Incentives for Anticompetitive Behavior by Public Enterprises," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(3), pages 183-206, May.
    7. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
    8. Sherman, Roger, 2001. "Optimal Worksharing Discounts," Journal of Regulatory Economics, Springer, vol. 19(1), pages 81-92, January.
    9. Michael A. Einhorn, 1987. "Optimality and Sustainability: Regulation and Intermodal Competition in Telecommunications," RAND Journal of Economics, The RAND Corporation, vol. 18(4), pages 550-563, Winter.
    10. Laffont, Jean-Jacques & Tirole, Jean, 1990. "Optimal Bypass and Cream Skimming," American Economic Review, American Economic Association, vol. 80(5), pages 1042-1061, December.
    11. Joel S. Demski & David E.M. Sappington & Pablo T. Spiller, 1987. "Managing Supplier Switching," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 77-97, Spring.
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    Cited by:

    1. Philippe Donder, 2006. "Access Pricing in the Postal Sector: Theory and Simulations," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(3), pages 307-326, May.
    2. repec:eee:juipol:v:48:y:2017:i:c:p:69-75 is not listed on IDEAS
    3. Helmut M. Dietl & Urs Trinkner, 2008. "Developing Universal Postal Services in Latin America – an Economic Perspective," Working Papers 0012, Swiss Economics, revised Nov 2008.

    More about this item

    Keywords

    access pricing; worksharing discounts; competition; postal; D43; L51;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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