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Market Opening, Downstream Access, and Competition in the Market for Mail

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Listed:
  • Christian Jaag
  • Urs Trinkner

Abstract

Market opening in the postal sector invites competition, but it may also present challenge to financing the universal service obligation (USO) currently in place. USO financing under entry is challenged both by the loss of revenues and scale economies in combination with the affordability constraints on pricing. The incumbent and the entrants would benefit from downstream access as compared to end-to-end competition if the access price is set according to avoided cost. This is due to a better cost allocation between operators. At lower access prices, the incumbent loses margin and therefore incurs losses. Concerning overall welfare implications of downstream access, the simulations reported here yield robustly negative results with bypass. Positive effects can be expected with a worksharing regime and access prices oriented at avoided cost.

Suggested Citation

  • Christian Jaag & Urs Trinkner, 2008. "Market Opening, Downstream Access, and Competition in the Market for Mail," Working Papers 0011, Swiss Economics.
    • Handle: RePEc:chc:wpaper:0011
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    File URL: http://www.swiss-economics.ch/RePEc/files/0011JaagTrinkner.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. De Donder, Philippe, 2006. "Access Pricing in the Postal Sector," IDEI Working Papers 319, Institut d'Économie Industrielle (IDEI), Toulouse.
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    Cited by:

    1. Matthias Finger & Christian Jaag & Markus Lang & Martin Lutzenberger & Urs Trinkner, 2009. "Bestimmung des Regulierungsbedarfs aus ökonomischer Sicht: Angemessenheit und Folgen einer funktionalen oder strukturellen Trennung von Swisscom," Studies and Reports, Swiss Economics, pages 1-92, February.

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    More about this item

    Keywords

    post; universal service obligation; full market opening; access; liberalization; mail;
    All these keywords.

    JEL classification:

    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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