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Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures

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  • Cremer, Helmuth
  • De Donder, Philippe
  • Dudley, Paul
  • Rodriguez, Frank

Abstract

Postal regulators set price controls in order to simultaneously ensure the provision of the universal service, promote competition and equity. We study the associated price control procedures in a model where the universal service provider offers both a single piece product and a business mail product and where entrants offer a bulk mail product. Our results from the numerical calibration of our model indicate that in the case where entry is confined only to access, a range of procedures appear capable of meeting these objectives. However, if bypass is available these trade offs become more costly.
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Suggested Citation

  • Cremer, Helmuth & De Donder, Philippe & Dudley, Paul & Rodriguez, Frank, 2006. "Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures," IDEI Working Papers 407, Institut d'Économie Industrielle (IDEI), Toulouse.
    • Handle: RePEc:ide:wpaper:6007
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    References listed on IDEAS

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    1. Billette de Villemeur, Etienne & Cremer, Helmuth & Roy, Bernard & Toledano, Joëlle, 2003. "Optimal Pricing and Price-Cap Regulation in the Postal Sector," Journal of Regulatory Economics, Springer, vol. 24(1), pages 49-62, July.
    2. Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
    3. De Donder, Philippe, 2006. "Access Pricing in the Postal Sector," IDEI Working Papers 319, Institut d'Économie Industrielle (IDEI), Toulouse.
    4. Armstrong Mark, 2008. "Access Pricing, Bypass and Universal Service in Post," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-16, June.
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