Advances in Regulatory Economics series
Edited by Michael A. Crew and Paul R. Kleindorfer
Chapter 8: Postal Markets and Electronic Substitution: Implications for Regulatory Practices and Institutions in Europe
Martin Maegli†, Christian Jaag‡, Martin Koller§ and Urs Trinkner¶ 1 INTRODUCTION The European postal markets are undergoing a reform which aims at promoting competition on the one hand and protecting the benefits of public services on the other. The important topics concerning postal regulation and the development of markets are: (i) market regime, (ii) definition and financing of universal services, (iii) market power control, and (iv) emerging electronic substitution of postal services. The decrease in mail volumes due to electronic substitution is discussed in the literature (for example, Nikali, 2008) and experts agree (see CIFS, 2009) that it will make a strong impact on the development of postal markets in the future. Crew et al. (2008) noted that finding an appropriate co-evolution of regulation and market development is one of the primary challenges of postal reform. The crucial question therefore is how the increasing convergence of postal and telecommunications markets can be mirrored by appropriate regulation (see also Crew and Kleindorfer, 2010). Except for the lack of a physical infrastructure, the postal sector is not entirely different from other network industries. The postal network is highly labor intensive and not subject to high investments or sunk costs.1 In a disaggregated approach to network regulation, postal markets are often analyzed along the value chain. Telecommunications markets are usually described based on their network layers. Following this ‘network layers approach’, the telecommunication network can be analyzed as consisting of a passive network layer including infrastructure, an active network layer, which sends and...
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