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Calculating the Cost of the Universal Service Obligation: The Need for a Global Approach

  • Christian Jaag

    ()

  • Martin Koller
  • Urs Trinkner

    ()

The paper presents the basic approaches to calculate the cost of the USO and compares them with the requirements of the 3rd postal directive. We conclude that the profitability cost approach will lead to consistent estimations if it is applied in a global way. We illustrate our findings with an econometric estimation of the net costs of Swiss Post’s obligation to provide a nationwide post office network for postal and financial services. We finally illustrate that the financing mechanism in place must be considered as well as there are important drawbacks on the cost of the USO.

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File URL: http://www.swiss-economics.ch/RePEc/files/0010JaagKollerTrinkner.pdf
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Paper provided by Swiss Economics in its series Working Papers with number 0010.

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Length: 17 pages
Date of creation: May 2008
Date of revision: Jul 2008
Publication status: Published in Progress in the Competitive Agenda in the Postal and Delivery Sector, edited by Crew, M A; Kleindorfer, P R., Cheltenham, 113-127
Handle: RePEc:chc:wpaper:0010
Contact details of provider: Web page: http://www.swiss-economics.ch
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  1. Christian Jaag, 2007. "Liberalization of the Swiss Letter Market and the Viability of Universal Service Obligations," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(III), pages 261-282, September.
  2. Joan Calzada & Christian Jaag & Urs Trinkner, 2010. "Universal service auctions in liberalized postal markets," Chapters, in: Heightening Competition in the Postal and Delivery Sector, chapter 17 Edward Elgar.
  3. Mehdi Farsi & Massimo Filippini & Urs Trinkner, 2006. "Economies of scale, density and scope in Swiss Post’s Mail Delivery," Working Papers 0005, Swiss Economics, revised Jul 2006.
  4. Helmut M. Dietl & Urs Trinkner & Reto Bleisch, 2004. "Liberalization and Regulation of the Swiss Letter Market," Working Papers 0001, Swiss Economics, revised Jul 2005.
  5. Massimo Filippini & Marika Zola, 2005. "Economies of scale and cost efficiency in the postal services: empirical evidence from Switzerland," Applied Economics Letters, Taylor & Francis Journals, vol. 12(7), pages 437-441.
  6. Martin Buser & Christian Jaag & Urs Trinkner, 2008. "Economics of Post Office Networks: Strategic Issues and the Impact on Mail Demand," Chapters, in: Handbook of Worldwide Postal Reform, chapter 5 Edward Elgar.
  7. Christian Jaag & Urs Trinkner, 2008. "Tendering Universal Service Obligations in Liberalized Network Industries," Working Papers 0013, Swiss Economics, revised Jan 2009.
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