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Optimal Pricing and Price-Cap Regulation in the Postal Sector

Author

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  • Billette de Villemeur, Etienne
  • Cremer, Helmuth
  • Roy, Bernard
  • Toledano, Joëlle

Abstract

This paper studies the optimal price structure in the postal sector when worksharing is available (e.g., for collection, sorting and transportation) and when the operator faces a break-even constraint. Users differ in opportunity and cost to engage in worksharing. We determine the optimal worksharing discount and provide sufficient conditions (on demand functions) under which it exceeds the ECPR level. Furthermore, we show that the optimal prices can be implemented through a global price cap imposed on a weighted average of the prices of all products. The appropriate weights are proportional to the market demand (evaluated at optimal prices) of the corresponding products. Copyright 2003 by Kluwer Academic Publishers

Suggested Citation

  • Billette de Villemeur, Etienne & Cremer, Helmuth & Roy, Bernard & Toledano, Joëlle, 2003. "Optimal Pricing and Price-Cap Regulation in the Postal Sector," Journal of Regulatory Economics, Springer, vol. 24(1), pages 49-62, July.
    • Handle: RePEc:kap:regeco:v:24:y:2003:i:1:p:49-62
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    Citations

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    Cited by:

    1. E. Villemeur & Helmuth Cremer & Bernard Roy & Joëlle Toledano, 2007. "Worksharing, access and bypass: the structure of prices in the postal sector," Journal of Regulatory Economics, Springer, vol. 32(1), pages 67-85, August.
    2. Leslie Bravo Chew & Luis Fernando Gamboa, 2006. "Subsidios cruzados: el caso del sector postal," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 8(15), pages 251-268, July-Dece.
    3. Claire Borsenberger & Helmuth Cremer & Philippe De Donder & Denis Joram & Bernard Roy, 2010. "Funding the cost of universal service in a liberalized postal sector," Chapters, in: Michael A. Crew & Paul R. Kleindorfer (ed.), Heightening Competition in the Postal and Delivery Sector, chapter 14, Edward Elgar Publishing.
    4. Angela S. Bergantino & Etienne Billette de Villemeur & Annalisa Vinella, 2006. "A Model of Partial Regulation in the Maritime Ferry Industry," SERIES 0010, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Jan 2006.
    5. repec:kap:iaecre:v:17:y:2011:i:4:p:465-475 is not listed on IDEAS
    6. Sappington, David E.M., 2024. "Optimal revenue adjustment in the presence of exogenous demand variation," Energy Economics, Elsevier, vol. 131(C).
    7. Joan Calzada, 2009. "Access charges under two-tier pricing," Journal of Regulatory Economics, Springer, vol. 35(3), pages 296-311, June.
    8. Helmut M. Dietl & Andreas Grütter & Martin Lutzenberger & Catia Felisberto & Matthias Finger, 2008. "The Effect of Entry Regulation on Process Innovation in the Swiss Mail Industry," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(I), pages 37-55, March.
    9. Jaag Christian, 2013. "Price Regulation and the Financing of Universal Services in Network Industries," Review of Law & Economics, De Gruyter, vol. 9(1), pages 125-150, September.
    10. Angela S. Bergantino & Etienne Billette De Villemeur & Annalisa Vinella, 2011. "Partial Regulation in Vertically Differentiated Industries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(2), pages 255-287, April.
    11. Gatta, Valerio & Marcucci, Edoardo, 2007. "Quality and public transport service contracts," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 36, pages 92-106.
    12. Cremer, Helmuth & Roy, Bernard & Toledano, Joëlle & de Villemeur, Étienne, 2004. "Worksharing, Pricing and Competition in the Postal Market," IDEI Working Papers 302, Institut d'Économie Industrielle (IDEI), Toulouse.
    13. De Donder, Philippe, 2006. "Access Pricing in the Postal Sector," IDEI Working Papers 319, Institut d'Économie Industrielle (IDEI), Toulouse.
    14. Kevin Currier, 2011. "Optimal Pricing and Entry Rules When a Regulated Dominant Firm Faces a Competitive Fringe," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(4), pages 465-475, November.
    15. Michael D. Bradley & Jeff Colvin & Mary K. Perkins, 2013. "What’s past is prologue: understanding developments in North American postal markets," Chapters, in: Michael A. Crew & Paul R. Kleindorfer (ed.), Reforming the Postal Sector in the Face of Electronic Competition, chapter 23, pages 336-349, Edward Elgar Publishing.
    16. De Donder Phillippe & Cremer Helmuth & Dudley Paul & Rodriguez Frank, 2008. "Price Controls in the Postal Sector: A Welfare Analysis of Alternative Control Structures," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-25, June.
    17. Cremer, Helmuth & Roy, Bernard & Toledano, Joëlle & de Villemeur, Étienne, 2003. "Access Pricing and Imperfect Competition," IDEI Working Papers 217, Institut d'Économie Industrielle (IDEI), Toulouse.
    18. Campbell, Alrick, 2018. "Cap prices or cap revenues? The dilemma of electric utility networks," Energy Economics, Elsevier, vol. 74(C), pages 802-812.

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