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 15: Optimal Pricing of Mail in the Transactional Market and Welfare for the Wider Communications Market

Philippe De Donder, Helmuth Cremer, Paul Dudley and Frank Rodriguez

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

Extract

* Philippe De Donder†, Helmuth Cremer‡, Paul Dudley§ and Frank Rodriguez¶ 38 39 40 41 1 INTRODUCTION The traditional bulk-mail market can be thought of as serving business communication needs with other businesses and customers, and includes transactional and advertising mail, as distinct from single-piece mail. Through transactional mail the sender is able to meet its obligation of providing information to the recipient (examples including bank statements and utility invoices). However, transactional mail can also be seen as one of several alternative media for financial institutions to communicate to their customers. Within this wider communications market, the financial institutions can and have started to develop internal profit centers in Europe to charge for their transactional activities. Such centers may form only one part of financial institutions’ overall profits and are investigated alongside the need for the universal service provider (USP) to break even and therefore within a wider communications market than just the mail market (but not within an even wider context of the financial institutions’ overall profits). In recent years mail volumes have declined within single-piece (SP) mail and bulk mail (BM) and while this is in part a consequence of the economic downturn, it is also due to the substitution of mail by other communication media. SP mail has been replaced by texting and email; advertising or direct mail (DM) has been replaced by alternative electronic communication; and transactional or non-direct mail (NDM) has been replaced by statements and invoices conveyed by email or over the Internet. Our particular...

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