Table of Contents

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 10: Towards a 21st Century Postal Service

John C. Panzar

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

Extract

John C. Panzar† 24 1 INTRODUCTION The global financial crisis accelerated a secular decline in postal sector volumes and finances. It now seems unlikely that either will recover along with the wider economy. Therefore, it is an appropriate time to reassess the role of the postal sector in the US going forward and to analyze the guiding principles under which it should be organized. This is the purpose of this chapter. It seems that the cyclical downturn in mail volumes caused by the global financial crisis may finally have triggered the secular decline in volumes that has long been predicted. While this may signal the beginning of a painful period of adjustment for the Postal Service and its employees, it does not mean that postal sector issues are no longer important. Even a declining postal sector remains a vital part of a nation’s transportation and communications infrastructure. Public policy during the forthcoming transition period remains vitally important. Indeed, I would argue that the task is no less urgent because the postal sector may be a ‘declining industry’. The same can be said of the railroad industry in the twentieth century. By the end of that century, railroads had clearly lost the dominant place in the US economy that they had enjoyed in 1900. Yet their role remained crucial, nevertheless. More importantly for the present discussion, their decline was managed very poorly from the perspective of public policy. It is important that this saga is not repeated with the postal sector,...

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