Table of Contents

Handbook of Worldwide Postal Reform

Handbook of Worldwide Postal Reform

Advances in Regulatory Economics series

Edited by Michael A. Crew, Paul R. Kleindofer and James I. Campbell Jr

The postal and delivery sector has been the subject of considerable interest in recent years. This Handbook brings together a number of contributions directed at understanding developments in the field of postal reform. The authors review the experience and plans of individual countries to provide some perspective on the problems faced in the area and the varied approaches being taken to address it. They also review key elements of policy and strategy that are important in this debate.

Chapter 11: Postal Reform and Product Innovation

Leon A. Pintsov and Andrei Obrea

Subjects: economics and finance, public sector economics


* Leon A. Pintsov† and Andrei Obrea† The multitude is more constant and wiser than the monarch. (Niccolò Machiavelli, ‘Discours’, 1517) 1. INTRODUCTION The postal sector is now facing the most challenging period in its history. On the one hand, up to now the postal sector in its letter-mail market has not faced competition as a result of the historic reserved areas and, in the case of the United States, the letterbox monopoly. On the other hand it is confronting formidable competition from outside of its traditional boundaries (this type of competition is frequently referred to as ‘electronic substitution’). The main intent of the postal regulatory reform is to unlock the benefits of competition in the letter-mail market. These benefits have been extensively discussed with the main focus mostly on cost reduction and increasing service reliability. However, these benefits, even if achieved, would still seem to offer a rather modest response to the challenges facing the sector. Furthermore, since electronic substitution extends competition well beyond the bounds of the traditional postal sector, sector-specific regulatory instruments are limited in their ability to deal with this challenge. This chapter addresses these challenges by offering a constructive solution to one of the basic imperatives of postal reform, the need to facilitate radical changes in the capabilities of postal service providers to undertake product innovation. The solution is based on far more extensive use of e-commerce technology than is currently being practiced. There are evident complementarities between many elements...

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