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Funding the USO: Cross-Subsidization and Net Cost Balancing

In: The Changing Postal Environment


  • Andreas Haller

    (Swiss Economics and University of Zurich)

  • Christian Jaag

    (Swiss Economics and EPFL)

  • Urs Trinkner

    (Swiss Economics and University of Zurich)


Incumbent operators providing universal services are increasingly active in competitive markets, which raise the issue of cross-subsidization. We analyze the competitive and welfare properties of the Swiss net cost balancing mechanism (NCB) applied since 2013 in the postal sector, and compare it to the traditional fully distributed cost approach based on activities. We find that NCB resolves the relevant competitive concerns while having superior welfare properties.

Suggested Citation

  • Andreas Haller & Christian Jaag & Urs Trinkner, 2020. "Funding the USO: Cross-Subsidization and Net Cost Balancing," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), The Changing Postal Environment, pages 129-137, Springer.
  • Handle: RePEc:spr:topchp:978-3-030-34532-7_10
    DOI: 10.1007/978-3-030-34532-7_10

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