Advances in Regulatory Economics series
Edited by Michael A. Crew and Paul R. Kleindorfer
Chapter 4: Understanding the Impact of E-Substitution on Letter Mail Volumes: A Multi-Country Panel Study
* Meloria Meschi†, Matthew Cherry‡, Carla Pace§ and Milena Petrova¶ 1 INTRODUCTION Until recently, a country’s income (GDP) and demographic factors were deemed to be the fundamental drivers of growth for its mail volumes: the larger a country’s population, and the higher its income, the larger the mail volumes could be expected to be. Of all the categories of mail, direct mail, which is generated by advertising, has been found to be the one with the strongest link to GDP (Veruete et al., 2010). This correspondence between mail volumes and income growth could be sustained because there were no substitutes to mail. The broadband revolution is believed to have changed all this. Electronic communications can be used to substitute for mail in a number of circumstances: for example, emails can substitute for letters among friends; invoices, statements and bills can be sent electronically; direct marketers can use electronic communications rather than direct mail; and magazines and newspapers can be distributed electronically on alternative platforms such as eReader and mobile devices. Thus, whether mail is classified by ‘purpose of sending’1 or by ‘type of sender’,2 one can expect to see some degree of electronic substitution in all types of letter mail: the extent to which such e-substitution outweighs any positive effects from income growth is an empirical question. A number of recent studies have analyzed the evolution of mail volumes in either individual or groups of countries. Looking at country analyses, and based on a period that preceded the acceleration of...
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