Table of Contents

Reforming the Postal Sector in the Face of Electronic Competition

Reforming the Postal Sector in the Face of Electronic Competition

Advances in Regulatory Economics series

Edited by Michael A. Crew and Paul R. Kleindorfer

In our increasingly technology-focused world, demand for traditional postal services is steadily shrinking. This timely volume examines the many challenges that the worldwide postal sector is facing as a result of growing electronic competition, and offers expert recommendations for reshaping postal structures to strengthen their competitiveness in an electronic age.

Chapter 3: A gravity model of international postal exchanges

José Ansón and Matthias Helble

Subjects: economics and finance, public sector economics

Extract

International postal exchanges have been an integral part of global communication for several centuries, first connecting distant locations throughout empires, and then people and businesses from different countries in the world through a single postal territory with the creation of the Universal Postal Union (UPU) in 1874. However, too little is known of the drivers of these exchanges, particularly as regards bilateral flows of letters, parcels and express items between different countries in an era of strong development of e-commerce and greater social and political globalization (KOF, 2012). This chapter proposes an empirical method to identify these drivers and measure their impact on international postal traffic flows so as to gain a better understanding of the functioning of international postal markets. Almost no empirical research exists on the modeling of bilateral international mail flows with a global coverage of countries and postal operators. International postal traffic has long remained in uncharted waters for economic analysis. However, international trade, migration and foreign direct investment flows have been analyzed empirically over several decades of economic research. The estimation of so-called ‘gravity equations’ has recently benefited from advances in economic theory (see Anderson and van Wincoop, 2004), is inspired by Newton’s law of gravity and was used in most of this research.

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