- Advances in Regulatory Economics series
Edited by Michael A. Crew and Paul R. Kleindorfer
Chapter 20: Competition and Regulation in the Italian Postal Market
20. Competition and regulation in the Italian postal market Vincenzo Visco Comandini† and Francesca Mazzarella‡ 1 INTRODUCTION In low postal volume countries the Universal Service Obligation (USO) financing may require external funding, for example, a state subsidy or, as occurred in Italy, internal cross-subsidies arising from profits of other non-postal businesses (such as financial or insurance services) or non-universal service businesses (such as added value delivery). Although legal, such systems do not effectively stimulate efficiency of the USO provider, or allow corporatizing and maybe privatizing, profitable businesses generated by postal administrations. The aim of this chapter is to provide a basic overview of the Italian postal market at the beginning of its full liberalization, and to suggest a reform of its USO financing. In Italy the compensation fund has been established by the legislative decree implementing the 97/67 Directive, but it has never worked because of an ineffective design of its tax base. This chapter proposes to reform the whole mechanism by significantly enlarging the tax base, thereby creating improved incentives for all market players. The chapter proceeds as follows. Section 2 highlights the two main features of the Italian postal market, low volumes coupled with an unsustainable USO postal market, requiring external funding. Section 3 describes the peculiar form of competition in place in Italy since the 1970s, which was harmonized with European rules by applying directives only in the late 1990s. Under the pressure of ex post antitrust regulation, the Italian legislator created the new ‘time-certain value-added’ postal...
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