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Access pricing, bypass and universal service in post

Author

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  • Armstrong, Mark

Abstract

An incumbent postal service provider faces two issues which make the design of efficient access pricing especially difficult. First, universal service obligations, together with the presence of significant fixed costs, require retail prices to be out of line with underlying marginal costs. Second, competing firms may be able to bypass the incumbent's delivery network. Within a simple framework, this note analyses how access charges should best be set in the light of these twin constraints.

Suggested Citation

  • Armstrong, Mark, 2006. "Access pricing, bypass and universal service in post," MPRA Paper 62, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62
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    References listed on IDEAS

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    1. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, December.
    2. De Donder, Philippe, 2006. "Access Pricing in the Postal Sector," IDEI Working Papers 319, Institut d'Économie Industrielle (IDEI), Toulouse.
    3. Mark Armstrong, 2001. "Access Pricing, Bypass, and Universal Service," American Economic Review, American Economic Association, vol. 91(2), pages 297-301, May.
    4. 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.
    5. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
    6. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
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    2. Valentiny, Pál & Kiss, Károly Miklós, 2009. "A nélkülözhetetlen eszközök értelmezése és a postai szolgáltatások [The interpretation of essential facilities and the postal services]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1001-1024.
    3. Xie, Li & Kong, Chun, 2024. "Electricity user connection pricing strategy: The incomplete contract theory perspective," Energy Economics, Elsevier, vol. 132(C).
    4. De Donder Philippe & Cremer Helmuth & Dudley Paul & Rodriguez Frank, 2011. "Welfare and Pricing of Mail in a Communications Market," Review of Network Economics, De Gruyter, vol. 10(3), pages 1-24, September.
    5. Markus Lang & Marc Laperrouza & Matthias Finger, 2013. "Competition Effects in a Liberalized Railway Market," Journal of Industry, Competition and Trade, Springer, vol. 13(3), pages 375-398, September.
    6. Xie, Li & Kong, Chun, 2023. "The social welfare effect of electricity user connection price policy reform," Applied Energy, Elsevier, vol. 346(C).
    7. Michael A. Crew & Paul R. Kleindorfer, 2010. "Access and the USO Under Full Market Opening," Chapters, in: Michael A. Crew & Paul R. Kleindorfer (ed.), Heightening Competition in the Postal and Delivery Sector, chapter 1, Edward Elgar Publishing.
    8. 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.
    9. De Donder Phillippe & Cremer Helmuth & Dudley Paul & Rodriguez Frank, 2008. "Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-25, June.
    10. 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, September.
    11. Carlos Pateiro-Rodríguez & Federico Martín-Bermúdez & Carlos Pateiro-López & Manuel Escourido-Calvo, 2024. "Universal Service Regulation and Network Effects in Services of General Economic Interest in the European Union," Economies, MDPI, vol. 12(10), pages 1-19, October.

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    Keywords

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    JEL classification:

    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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