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Universal service financing in competitive postal markets: one size does not fit all

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  • A. Gautier
  • D. Paolini

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Abstract

In the postal sector, the net cost of universal service depends on the content of the service, the postal market characteristics and the country s geographical configuration. These three groups of factors affect both the direct cost of providing the service and the extent of competition on the market. In this paper, we consider countries with different geographical characteristics and we show that the choice of an appropriate mechanism to share the cost of universal service between market participants depends on the country configuration. Thus, for universal service financing, one size does not fit all.

Suggested Citation

  • A. Gautier & D. Paolini, 2010. "Universal service financing in competitive postal markets: one size does not fit all," Working Paper CRENoS 201014, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  • Handle: RePEc:cns:cnscwp:201014
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    References listed on IDEAS

    as
    1. Steffen Hoernig, 2006. "Should uniform pricing constraints be imposed on entrants?," Journal of Regulatory Economics, Springer, vol. 30(2), pages 199-216, August.
    2. Axel Gautier & Xavier Wauthy, 2010. "Price competition under universal service obligations," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(3), pages 311-326.
    3. Bloch Francis & Gautier Axel, 2008. "Access Pricing and Entry in the Postal Sector," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-24, June.
    4. de Bijl, P.W.J. & van Damme, E.E.C. & Larouche, P., 2005. "Regulating Access to Stimulate Competition in Postal Markets," Discussion Paper 2005-026, Tilburg University, Tilburg Law and Economic Center.
    5. Philippe Choné & Laurent Flochel & Anne Perrot, 1999. "Allocating and Funding Universal Service Obligations in a Competitive Network Market," Working Papers 99-55, Center for Research in Economics and Statistics.
    6. 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.
    7. Anderson, Simon P. & de Palma, Andre & Kreider, Brent, 2001. "The efficiency of indirect taxes under imperfect competition," Journal of Public Economics, Elsevier, vol. 81(2), pages 231-251, August.
    8. De Donder, Philippe, 2006. "Access Pricing in the Postal Sector," IDEI Working Papers 319, Institut d'Économie Industrielle (IDEI), Toulouse.
    9. Claire Borsenberger & Helmuth Cremer & Philippe De Donder & Denis Joram & Bernard Roy, 2010. "Funding the cost of universal service in a liberalized postal sector," Chapters,in: Heightening Competition in the Postal and Delivery Sector, chapter 14 Edward Elgar Publishing.
    10. 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.
    11. Valletti, Tommaso M & Hoernig, Steffen & Barros, Pedro P, 2002. "Universal Service and Entry: The Role of Uniform Pricing and Coverage Constraints," Journal of Regulatory Economics, Springer, vol. 21(2), pages 169-190, March.
    12. Gautier, Axel & Wauthy, Xavier, 2012. "Competitively neutral universal service obligations," Information Economics and Policy, Elsevier, vol. 24(3), pages 254-261.
    13. Gonzales d’Alcantara & Axel Gautier, 2008. "National Postal Strategies after a Full Postal Market Opening," Chapters,in: Competition and Regulation in the Postal and Delivery Sector, chapter 12 Edward Elgar Publishing.
    14. repec:cor:louvrp:-2006 is not listed on IDEAS
    15. Christian Jaag & Martin Koller & Urs Trinkner, 2009. "Calculating the Cost of the Universal Service Obligation: The Need for a Global Approach," Chapters,in: Progress in the Competitive Agenda in the Postal and Delivery Sector, chapter 8 Edward Elgar Publishing.
    16. Mirabel, F. & Poudou, J.-C. & Roland, M., 2009. "Universal service obligations: The role of subsidization schemes," Information Economics and Policy, Elsevier, vol. 21(1), pages 1-9, February.
    17. Chone, Philippe & Flochel, Laurent & Perrot, Anne, 2002. "Allocating and funding universal service obligations in a competitive market," International Journal of Industrial Organization, Elsevier, vol. 20(9), pages 1247-1276, November.
    18. Crew, Michael A & Kleindorfer, Paul R, 1998. "Efficient Entry, Monopoly, and the Universal Service Obligation in Postal Service," Journal of Regulatory Economics, Springer, vol. 14(2), pages 103-125, September.
    19. Panzar, John C., 2000. "A methodology for measuring the costs of universal service obligations," Information Economics and Policy, Elsevier, vol. 12(3), pages 211-220, September.
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    Citations

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    Cited by:

    1. Gautier, Axel & Wauthy, Xavier, 2012. "Competitively neutral universal service obligations," Information Economics and Policy, Elsevier, vol. 24(3), pages 254-261.
    2. Christian Jaag & Urs Trinkner, 2011. "The interaction between universal service costing and financing in the postal sector: a calibrated approach," Journal of Regulatory Economics, Springer, vol. 39(1), pages 89-110, February.
    3. Jaag Christian, 2013. "Price Regulation and the Financing of Universal Services in Network Industries," Review of Law & Economics, De Gruyter, vol. 9(1), pages 125-150, September.
    4. Gautier Axel & Poudou Jean-Christophe, 2014. "Reforming the Postal Universal Service," Review of Network Economics, De Gruyter, vol. 13(4), pages 453-477, December.
    5. Poudou, Jean-Christophe & Roland, Michel, 2014. "Efficiency of uniform pricing in universal service obligations," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 141-152.
    6. Michael D. Bradley & Jeff Colvin & Mary K. Perkins, 2014. "On alternative USO financing mechanisms for the US postal market," Chapters,in: The Role of the Postal and Delivery Sector in a Digital Age, chapter 13, pages 174-188 Edward Elgar Publishing.
    7. repec:eee:indorg:v:52:y:2017:i:c:p:63-95 is not listed on IDEAS

    More about this item

    Keywords

    universal service obligations; compensation fund; market liberalization; cream-skimming;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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