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The Postal Accountability and Enhancement Act After 10 Years—Some Proposals for Reform Read chapter Read first chapter

2017 | OriginalPaper | Chapter

An Examination of the Links Between Postal Price Constraints, Efficiency, Competition and Public Welfare

Authors : Philippe De Donder, Frank Rodriguez, Soterios Soteri

Published in: The Changing Postal and Delivery Sector

Publisher: Springer International Publishing

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Abstract

Mail volumes in developed countries are in decline while universal service obligations (USOs) and uniform pricing constraints on some mail products remain in place.

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previous chapter E-Substitution and the Demand for Business Mail in the UK: Trends and Prospects
next chapter The Personalization and Volume Trade-Off: A Future Without Saturation Mail?
Appendix
Available only for authorised users
Footnotes
1
While there is an extended empirical literature on the impact of strikes and trade unions on efficiency (Dickerson et al 1997; Doucouliagos and Laroche 2003; Maki 1983), to the best of our knowledge we are the first to model analytically how the possibility of industrial action impacts efficiency choices of a regulated firm.
 
2
This assumption is a good approximation provided the price difference between the two goods is not too small. See constraint C2 in the Appendix for a precise mathematical statement.
 
3
See the end of this section for a precise definition of first-period profit and the Appendix for a mathematical statement of these constraints, labeled C1 to C3.
 
4
As explained at the end of this section, it would not wish to change them anyway.
 
5
This is broadly equivalent in the model to positing absolute changes in efficiency for both types of operator separately and then considering the difference between these two rates (relative efficiency).
 
6
See the Appendix for an analytical statement of volumes in P2, and in P1S .
 
7
As explained in the Appendix modelling a decrease in volumes demanded requires decreasing the surplus that consumers obtain from consuming any given quantity of mail. Recall that the fixed cost also decreases by 10 % in P2 compared to P1, so that the USP breaks even in P2NS even though the contributions to profits are lower.
 
8
The results reported in Tables 1 and 2 are profit-maximizing prices, volumes and welfare outcomes for just two points on each of these schedules, at e = 2 and 3 %.
 
9
The linearity of demand functions explains why profit is close to being linear in e.
 
10
Precise analytical statements are available upon request to the authors.
 
Literature
De Donder, P., Cremer, H., Dudley, P., & Rodriguez, F. (2006). A welfare analysis of price controls with end-to-end mail and access services. In: M. A. Crew & P. R. Kleindorfer (Eds.), Liberalization of the postal and delivery sector (pp. 53–72). Cheltenham: Edward Edgar.
Dickerson, A. P., Geroski, P.A., & Knight, K. G. (1997). Productivity, efficiency and strike activity. International Review of Applied Economics, 11(1), 119–134.
Doucouliagos, C., & Laroche, P. (2003). What do unions do to productivity? A meta-analysis. Industrial Relations, 42(4), 650–691.
Maki, D. R. (1983). The effects of unions and strikes on the rate of growth of total factor productivity in Canada. Applied Economics, 15(1), 29–41.CrossRef
Rodriguez, F., Soteri, S., & Tobias, S. (2017). E-substitution and the demand for business mail in the UK: Trends and prospects. In M. A. Crew, P. L. Parcu, & T. J. Brennan (Eds.), The changing postal and delivery sector—towards a renaissance. Berlin: Springer.
Metadata
Title
An Examination of the Links Between Postal Price Constraints, Efficiency, Competition and Public Welfare
Authors
Philippe De Donder
Frank Rodriguez
Soterios Soteri
Copyright Year
2017
Book
The Changing Postal and Delivery Sector

Print ISBN: 978-3-319-46045-1

Electronic ISBN: 978-3-319-46046-8

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-3-319-46046-8_4