Advances in Regulatory Economics series
Edited by Michael A. Crew and Paul R. Kleindorfer
Chapter 25: Welfare and pricing with single-piece and bulk mail access competition in the postal sector
Following the full opening of the postal market to competition, the third European Directive makes a distinction between single-piece (SP) mail and bulk mail (BM) to include the SP mail in the universal service and exclude BM from the universal service. SP mail comprises social and business mail, and there is the option for the BM market to include access to the incumbent operator’s network. This opens up to competition the upstream market in collection, outward sortation and transportation not only for BM, but also for all upstream mail if entrants can consolidate SP and BM upstream. While the fixed upstream costs for the social mail network may be prohibitively high for entry with respect to collection from postboxes, it may be less so for business mail where collection of larger mailings is made from businesses directly or from dedicated collection hubs. This form of market opening appears to leave the universal service provider (USP) exposed in its recovery of fixed upstream costs for business mail.
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