Competition and Regulation in the Postal and Delivery Sector
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Competition and Regulation in the Postal and Delivery Sector

Edited by Michael A. Crew and Paul R. Kleindorfer

orldwide, postal and delivery economics has attracted considerable interest. Numerous questions have arisen, including the role of regulation, funding the Universal Service Obligation, postal reform in Europe, Asia and North America, the future of national postal operators, demand and pricing strategies, and the principles that should govern the introduction of competition. Collected here are responses to these questions in the form of 24 essays written by researchers, practitioners, and senior managers from throughout the world.
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Chapter 1: Regulation and the USO under Entry

Michael A. Crew and Paul R. Kleindorfer


* Michael A. Crew and Paul R. Kleindorfer The postal sector is now in the midst of major change, especially in Europe as the EU moves to open up postal markets to competition. Some countries, notably the United Kingdom in 2006 and Sweden in 1993, have already opened their markets to competition. According to the proposal for a Third Postal Directive, approved by the European Parliament on July 11, 2007, markets in most of the EU-15 member states will be open for competition in 2011, with all EU states open to competition by 2013.1 Given the market dominant position of incumbent postal operators at the beginning of full market opening (FMO), and the requirement for continuing funding of the universal service obligation (USO), FMO will not mean the end of regulation, which will remain an essential element of governance for postal markets for the foreseeable future. Notwithstanding the importance of regulation under FMO, appropriate models for postal regulation have been slow to emerge, and there still remains considerable variety across countries in this respect (e.g., WIK-Consult, 2006). We will argue that insufficient consideration has been given to how regulation will function and its impact on funding the USO in the absence of a reserved area. The chapter will examine how the USO might be funded under FMO without explicit subsidies, focusing on the role of regulation. Attitudes about competition in the postal sector also vary widely across countries. Certainly, one of the major concerns is that the USO could not...

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