- Advances in Regulatory Economics series
Edited by Michael A. Crew and Paul R. Kleindorfer
Chapter 11: Vulnerable users in times of declining demand: the case of basic bank services in Norway and Sweden
During the past twenty years, communication has become more focused on electronic solutions. Instead of sending letters, people enter social networks and use their mobile phone. Instead of conducting manual bank transactions, people use credit cards and pay bills over the Internet. This development has gone hand in hand with a falling demand for services provided under the postal Universal Service Obligation (USO), resulting in a continuous increase in the unit cost for providing postal universal services. This chapter examines the need for adapting the postal USO to the digital age and the prospect of ensuring services for vulnerable users by other means than a universal service obligation. It relates to earlier publications by, among others, Cremer et al. (1997), Ambrosini et al. (2006), Econ Pöyry (2010) and RAND Europe (2011), analyzing the cost of and demand for USO services and the impact of reducing the USO scope. The chapter contributes to the earlier findings in at least four ways. First, it deals exclusively with banking services within the postal USO. This has not been the focus of earlier research. Second, it evaluates the need for public intervention based on actual behavior by analyzing transaction data and establishing a net cost of the USO per critical transaction. This approach is advantageous compared with other approaches in estimating the need for public intervention based on consumers’ stated preferences.
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