Advances in Regulatory Economics series
Edited by Michael A. Crew and Paul R. Kleindorfer
Chapter 21: On the Use of Reverse Auctions to Designate Universal Postal Service Providers
* Carlos Costa† 55 1 INTRODUCTION There has been an intense debate on the conditions regarding the permanent provision of a minimum set of postal services for the whole of each nation’s territory and across borders, with adequate quality of service (QoS) levels and at affordable prices and, in particular, regarding the necessity to continue imposing the Universal Service Obligation (USO) upon operators to ensure that goal, within a full market opening (FMO) environment. However, the literature regarding the use of reverse auctions specifically to designate the postal universal service provider (USP), is fairly limited – Borrmann (2004) and Calzada et al. (2010) seem to be the most interesting exceptions – and, in the case of the particular conditions of the Portuguese market, nonexistent. After a very brief sketch of the Portuguese experience on USO policy, Section 2 provides the context of the discussion of reverse auctions for USPs. Section 3 draws attention to conceptual and design issues associated with reverse auctions. Sections 4 and 5 discuss, respectively, the advantages and the disadvantages of reverse auctions in the postal USO. Finally, Section 6 provides a brief summary, the main conclusions and some ideas that seem to need additional research if the use of reverse auctions is to be considered an appropriate measure in the Portuguese market. 2 THE FUTURE: REVERSE AUCTIONS TO DESIGNATE POSTAL USPS? The enforcement of a USO in Portugal ensured the reliable provision of postal services for the whole of the country, with an appropriate QoS1 and at an affordable...
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