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Do opening hours and unobserved heterogeneity affect economies of scale and scope in postal outlets?

  • Massimo Filippini

    ()

    (Istituto microeconomia e economia pubblica (MecoP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera and Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Martin Koller

    ()

    (Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Urs Trinkner

    (University of Zurich, Switzerland)

The purpose of this study is to analyze the cost structure of Swiss Post’s postal outlets. In particular, the idea is to assess economies of scale and scope in post offices and franchised postal agencies. Information on their optimal size and production structure is of importance from the policy-makers’point of view because this hypothetical situation may be a basis for calculation of reimbursements when providing the universal service. Two important novelties are introduced in this study. First, the latent class model accounts for postal outlets with different underlying production technologies, caused by unobserved factors. Second, the cost model includes standby time as an indicator of public service because regulated accessibility and negotiated opening hours that enhance public service frequently lead to opening hours that exceed the time necessary to operate the demand. Overall, this analysis confirms the existence of increasing unexploited economies of scale and scope with falling outputs in the Swiss Post office network. Furthermore, the results for the latent class model point to the existence of unobserved heterogeneity in the industry.

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File URL: http://doc.rero.ch/lm.php?url=1000,42,6,20100427173657-MV/wp1007.pdf
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Paper provided by USI Università della Svizzera italiana in its series Quaderni della facoltà di Scienze economiche dell'Università di Lugano with number 1007.

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Length: 23 pages
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:lug:wpaper:1007
Contact details of provider: Web page: https://www.bul.sbu.usi.ch

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  1. Xiaoqing Fu & Shelagh Heffernan, 2008. "Economies of scale and scope in China's banking sector," Applied Financial Economics, Taylor & Francis Journals, vol. 18(5), pages 345-356.
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  5. del Corral, Julio & Alvarez, Antonio & Tauer, Loren W., 2009. "Detecting Technological Heterogeneity in New York Dairy Farms," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49293, Agricultural and Applied Economics Association.
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  10. Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2006. "Economies of scale and scope in local public transportation," CEPE Working paper series 06-48, CEPE Center for Energy Policy and Economics, ETH Zurich.
  11. Massimo Filippini, 1999. "Economies Of Scale In The Swiss Nursing Home Industry," SOI - Working Papers 9901, Socioeconomic Institute - University of Zurich.
  12. Koshal, Rajindar K. & Koshal, Manjulika, 1999. "Economies of scale and scope in higher education: a case of comprehensive universities," Economics of Education Review, Elsevier, vol. 18(2), pages 269-277, April.
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  15. Caves, Douglas W & Christensen, Laurits R & Tretheway, Michael W, 1980. "Flexible Cost Functions for Multiproduct Firms," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 477-81, August.
  16. Pulley, Lawrence B & Braunstein, Yale M, 1992. "A Composite Cost Function for Multiproduct Firms with an Application to Economies of Scope in Banking," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 221-30, May.
  17. Giovanni Fraquelli & Massimiliano Piacenza & Davide Vannoni, 2004. "Scope and scale economies in multi-utilities: evidence from gas, water and electricity combinations," Applied Economics, Taylor & Francis Journals, vol. 36(18), pages 2045-2057.
  18. Preyra, Colin & Pink, George, 2006. "Scale and scope efficiencies through hospital consolidations," Journal of Health Economics, Elsevier, vol. 25(6), pages 1049-1068, November.
  19. Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2008. "Economies of Scale and Scope in Multi-Utilities," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 123-144.
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