Liberalization of the Swiss Letter Market and the Viability of Universal Service Obligations
Journal
Swiss Journal of Economics and Statistics
ISSN
0303-9692
Type
journal article
Date Issued
2007-05-01
Author(s)
Abstract
We discuss the ongoing liberalization process in the market for addressed letter mail in Switzerland. The core of the paper is an assessment of the liberalization's impact on the financial viability of various universal service obligations with and without access to the incumbent's downstream delivery network for customers and competitors. We propose a simple calibrated model of the Swiss letter
market offering theoretical insights into the mechanics of market opening along with quantitative conclusions bearing direct policy relevance. The extent of the entrants' market coverage and the equilibrium in the resulting price competition are endogenously determined. Our simulations suggest caution in introducing full market opening. For the scenarios considered, the model shows that either the burden of the uso must be reduced (e.g. with respect to the frequency and the coverage of delivery and / or through price differentiation). Alternatively, other means of assuring financial stability of Swiss Post must be sought, be it through external funds or demand stimulation through new producs, possibly in the worksharing domain.
market offering theoretical insights into the mechanics of market opening along with quantitative conclusions bearing direct policy relevance. The extent of the entrants' market coverage and the equilibrium in the resulting price competition are endogenously determined. Our simulations suggest caution in introducing full market opening. For the scenarios considered, the model shows that either the burden of the uso must be reduced (e.g. with respect to the frequency and the coverage of delivery and / or through price differentiation). Alternatively, other means of assuring financial stability of Swiss Post must be sought, be it through external funds or demand stimulation through new producs, possibly in the worksharing domain.
Language
English
Keywords
Liberalization
Mail
Universal Service Obligation
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Lang
Publisher place
Bern
Volume
143
Number
III
Start page
261
End page
282
Pages
22
Subject(s)
Division(s)
Eprints ID
38684
File(s)![Thumbnail Image]()
Name
liberalization_final.pdf
Size
191.35 KB
Format
Adobe PDF
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