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Demand Elasticities at the Intensive and Extensive Margins for Advertising Mail Traffic in the UK

In: The Changing Postal Environment


  • Frédérique Fève

    (University of Toulouse)

  • Thierry Magnac

    (University of Toulouse)

  • Soterios Soteri

    (Royal Mail Group)


Advertising letter mail competes for marketing budgets against a range of different media types. Since the early 2000s, its share of total advertising expenditure in the UK declined by approximately half to account for less than a tenth by the end of 2018. However, advertising mail remains an important component of UK letter volumes, accounting for over three billion items and around a third of addressed inland letters in 2018. A number of factors impact the demand for advertising letters, some outside the control of postal operators and decision-makers (such as economic conditions and advances in new technology), but price is a factor that can influence demand. Here we investigate advertising price elasticities using a rich source of UK customer data.

Suggested Citation

  • Frédérique Fève & Thierry Magnac & Soterios Soteri, 2020. "Demand Elasticities at the Intensive and Extensive Margins for Advertising Mail Traffic in the UK," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), The Changing Postal Environment, pages 213-224, Springer.
  • Handle: RePEc:spr:topchp:978-3-030-34532-7_16
    DOI: 10.1007/978-3-030-34532-7_16

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    References listed on IDEAS

    1. Avery, Robert B & Hansen, Lars Peter & Hotz, V Joseph, 1983. "Multiperiod Probit Models and Orthogonality Condition Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 21-35, February.
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    4. Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), 2018. "New Business and Regulatory Strategies in the Postal Sector," Topics in Regulatory Economics and Policy, Springer, number 978-3-030-02937-1, March.
    5. Deaton, Angus & Irish, Margaret, 1984. "Statistical models for zero expenditures in household budgets," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 59-80.
    6. Frédérique Fève & Thierry Magnac & Leticia Veruete-McKay & Soterios Soteri, 2018. "How Price Sensitive Is Letter Advertising Mail in the UK?," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), New Business and Regulatory Strategies in the Postal Sector, pages 207-217, Springer.
    7. George J. Borjas, 1980. "The Relationship between Wages and Weekly Hours of Work: The Role of Division Bias," Journal of Human Resources, University of Wisconsin Press, vol. 15(3), pages 409-423.
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