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Multi-Modal Competition and the Future of Mail

Multi-Modal Competition and the Future of Mail

Advances in Regulatory Economics series

Edited by Michael A. Crew and Paul R. Kleindorfer

This compilation of original papers selected from the 19th Conference on Postal and Delivery Economics and authored by an international cast of economists, lawyers, regulators and industry practitioners addresses perhaps the most significant problem that has ever faced the postal sector – electronic competition from information and communication technologies. This has increased significantly over the last few years with a consequent serious drop in mail volume.

Chapter 9: Affordability of Postal Services Addressed to Households

Claire Borsenberger, Denis Joram and Lise Martin

Subjects: economics and finance, competition policy, public sector economics


* Claire Borsenberger†, Denis Joram‡ and Lise Martin§ 21 22 23 1 INTRODUCTION Price affordability is a general principle, common to many services of general economic interest (SGEIs). In practice, social policies dealing with affordability in the telecom, water or energy sectors are aimed at lower-income consumers and are implemented through subsidies and various forms of price regulation including price ceilings and uniform pricing. In the postal sector, affordability is one of the characteristics of the universal service. The European Directive (97/67/CE) requires that member states ‘ensure that the tariffs for each of the services forming part of the universal service shall be affordable’, but does not specify what an affordable tariff is and how affordability is measured. The subsidiarity principle applies on this topic, leaving this to member state discretion. However, this is not a trivial issue. The affordable or non-affordable feature of a product or a service should be reflected in its unit price and the ability of customers to pay for a given level of consumption. Some studies measured affordability by calculating the number of minutes of work required to afford a particular service (see, for example, Copenhagen Economics, 2010 and Deutsche Post, 2010). Except for these contributions, the affordability issue has not been studied in depth in the postal sector yet. This could be explained by the small part of the typical household budget dedicated to postal services. However, the direct impact of postal prices on the budget of households is only one aspect of the problem,...

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