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Pricing and Efficiency Decisions for Letter and Parcel Markets when Industrial Relations Matter

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  • De Donder, Philippe
  • Rodriguez, Frank
  • Soteri, Soterios

Abstract

A key feature of postal markets today is the changing mix of physical mail. While the demand for letters is in decline, predominantly because of e-substitution, parcel volumes are increasing due to the rapid growth of e-commerce. Universal service providers (USPs) in the postal sector serve both markets. In the former, universal service obligations (USOs) are in place and regulators and private shareholders, where the USP is privatized, press for improvements in efficiency. In the latter, markets are highly competitive with parcel companies offering differentiated services. In both markets, USPs are under pressure to lower costs and prices to maintain financial viability. But postal operations are labor intensive and the pressure to lower costs poses a threat of industrial action.
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Suggested Citation

  • De Donder, Philippe & Rodriguez, Frank & Soteri, Soterios, 2017. "Pricing and Efficiency Decisions for Letter and Parcel Markets when Industrial Relations Matter," TSE Working Papers 17-822, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:31790
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    Cited by:

    1. Philippe De Donder & Frank Rodriguez & Soterios Soteri, 2018. "The Impact of Increasing Competition for Non-Contract Parcels on Postal Prices and Efficiency Decisions," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), New Business and Regulatory Strategies in the Postal Sector, pages 175-189, Springer.

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