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Pricing by state-owned enterprises: the case of postal services

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  • R. Richard Geddes

    (Policy Analysis and Management, Cornell University, Ithaca, NY, USA)

Abstract

Sappington and Sidak develop a model of state-owned enterprise (SOE) pricing behavior in which firms maximize a weighted average of revenues and profits. The model predicts that SOEs will lower prices in more-elastic markets and raise them in less-elastic markets if the weight they place on profit is positive. The Postal Reorganization Act of 1970 relaxed the institutional constraints on pricing by the US Postal Service, which allows a test of the Sappington-Sidak model. The model's predictions are broadly confirmed. Congress passed the Postal Accountability and Enhancement Act in 2006, which may help address some anticompetitive concerns in this industry. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • R. Richard Geddes, 2008. "Pricing by state-owned enterprises: the case of postal services," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(7), pages 575-591.
    • Handle: RePEc:wly:mgtdec:v:29:y:2008:i:7:p:575-591
    DOI: 10.1002/mde.1420
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    References listed on IDEAS

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    2. Aidan R. Vining, 2016. "What Is Public Agency Strategic Analysis (PASA) and How Does It Differ from Public Policy Analysis and Firm Strategy Analysis?," Administrative Sciences, MDPI, vol. 6(4), pages 1-31, December.

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