IDEAS home Printed from
   My bibliography  Save this book chapter

On Correcting the Cross-Subsidies Caused by the US Postal Tariff

In: The Changing Postal Environment


  • Edward S. Pearsall

    (Independent Consultant)

  • Margaret M. Cigno

    (U.S. Postal Regulatory Commission (PRC))

  • Lyudmila Y. Bzhilyanskaya

    (U.S. Postal Regulatory Commission (PRC))


Cross-subsidies are evidence of defects in the prices charged by a multi-product public enterprise. Products with prices causing cross-subsidies may be identified by applying the complete incremental cost test described by Faulhaber (Am Econ Rev 65:966–977, 1975) and Pearsall (J Regul Econ 36:274–285, 2009). This paper describes the application of the test to the US postal tariff of FY 2018, the calculation of upper and lower bounds to the price increases needed to eliminate the cross-subsidies identified by the test, adjustments to the bounds made to account for demand effects, and the determination of efficient Ramsey-Boiteux price increases.

Suggested Citation

  • Edward S. Pearsall & Margaret M. Cigno & Lyudmila Y. Bzhilyanskaya, 2020. "On Correcting the Cross-Subsidies Caused by the US Postal Tariff," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), The Changing Postal Environment, pages 111-128, Springer.
  • Handle: RePEc:spr:topchp:978-3-030-34532-7_9
    DOI: 10.1007/978-3-030-34532-7_9

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:topchp:978-3-030-34532-7_9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.