Advances in Regulatory Economics series
Edited by Michael A. Crew, Paul R. Kleindofer and James I. Campbell Jr
25. 1. Postal reform in Israel* Avi Azuz,† Udi Nisan‡ and Eli Sagi§ INTRODUCTION Over the past two decades the Israeli postal market has undergone wide-ranging reform. The process began with the establishment of the Israeli Postal Authority (IPA) in 1987 and culminated in 2006–07 with the creation of the Israeli Postal Company (IPC), the opening of the bulk-mail market to competition, the introduction of a new set of tariﬀs (in November 2007) and the granting of a new license to the IPC (in January 2008), thus creating a regulatory framework and introducing additional ﬂexibility in the introduction of new products. The reform in the Israeli postal sector has been part of an economy-wide process, which started in the mid-1980s. From the early days of the Israeli statehood until that time, its economy was characterized by heavy government involvement in almost all dimensions of economic activities. The economy consequently created a huge budget deﬁcit (reaching almost 15 percent of GDP in the early 1980s) and experienced an accelerating inﬂation that culminated at 10–15 percent per month! A dramatic, very successful, Stabilization Plan was applied that eliminated almost completely the problem of inﬂation. As part of this plan, the government began withdrawing from its excessive involvement in the economy, and the reform process accelerated. The purpose of this chapter is to describe the reform process in the postal industry and the debates that accompanied it, with emphasis on the unique traits of the Israeli market....
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