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Competition and Regulation in the Postal and Delivery Sector

Competition and Regulation in the Postal and Delivery Sector

Advances in Regulatory Economics series

Edited by Michael A. Crew and Paul R. Kleindorfer

orldwide, postal and delivery economics has attracted considerable interest. Numerous questions have arisen, including the role of regulation, funding the Universal Service Obligation, postal reform in Europe, Asia and North America, the future of national postal operators, demand and pricing strategies, and the principles that should govern the introduction of competition. Collected here are responses to these questions in the form of 24 essays written by researchers, practitioners, and senior managers from throughout the world.

Chapter 23: Tradeoffs in Product Costing: The Statistical Impact of Cost Pool Formation Decisions

Alan Robinson, Richard Waterman and David Rawnsley

Subjects: economics and finance, public sector economics


23. Tradeoffs in product costing: the statistical impact of cost pool formation decisions Alan Robinson, Richard Waterman and David Rawnsley 1. INTRODUCTION The accuracy of a product costing approach is often a compromise between the cost of data collection and analysis and the market and regulatory demands on a postal administration. As no postal administration has unlimited resources for product costing, identifying ways to reduce product costing expenses without significantly reducing accuracy of cost measurement would free up resources to work on costing issues that could use greater attention. In an unregulated environment, costing efforts are driven by market demand to tailor products and prices for individual customers. Freeing resources could allow a postal administration to develop accurate product costs and profitability measures for more specialized products that appeal to small subsets of their customer base. In the increasingly competitive marketplace following postal liberalization, customers will expect that the postal supplier will bid for their business in the same manner that their other postal, transportation, and logistics suppliers do and these bids will likely include specific service and price parameters that reflect the demands that the customer places on the postal network. Finding more efficient ways to develop accurate product costs should be a priority for postal administrations following postal reform, as it would temper the demand for increased spending on product costing and the associated data collection and analysis efforts that a customer-tailored bidding process would require. In a regulated environment,...

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