Edited by Michael A. Crew and Paul R. Kleindorfer
Chapter 4: Price comparisons in the parcel industry: a new approach based on the hedonic price theory
E-commerce activity is expanding, and the parcel sector is increasingly of interest to the European Commission, who studied in particular the EU cross-border parcels market and will publish a Green Paper on cross-border parcel prices in 2012. Opened to competition for many years, a part of the parcels sector is subject to the Universal Service Obligation (USO), notably to an affordability constraint. The USO concerns mostly over-the-counter parcels, from private households. In view of the growth of parcels among private households, the affordability issue could become increasingly significant in the future. Until now, this issue has been dealt essentially through international basic price comparisons based on absolute values, adjusted to take into account differences in purchase power between countries. However, differences in both the costs of parcel delivery processes and the qualitative features of the products offered by European Universal Service Providers (USPs) have not always been taken into account. Often, parcel prices are compared in absolute terms, without any weighing reflecting the quality of the product. This does not prevent national regulators from basing their policy on these comparisons.
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