Liberalization of the Swiss Letter Market and the Viability of Universal Service Obligations

Christian Jaag

MPRA Paper from University Library of Munich, Germany

Abstract: We discuss the ongoing liberalization process in the market for addressed letter mail in Switzerland. The core of the paper is an assessment of the liberalization's impact on the financial viability of various universal service obligations with and without access to the incumbent's downstream delivery network for customers and competitors. We propose a simple calibrated model of the Swiss letter market offering theoretical insights into the mechanics of market opening along with quantitative conclusions bearing direct policy relevance. The extent of the entrants' market coverage and the equilibrium in the resulting price competition are endogenously determined. Our simulations suggest caution in introducing full market opening. For the scenarios considered, the model shows that either the burden of the USO must be reduced (e.g. with respect to the frequency and the coverage of delivery and / or through price differentiation). Alternatively, other means of assuring financial stability of Swiss Post must be sought, be it through external funds or demand stimulation through new producs, possibly in the worksharing domain.

Keywords: Liberalization; Mail; Universal Service Obligation (search for similar items in EconPapers)
JEL-codes: H4 H44 L52 (search for similar items in EconPapers)
Date: 2007-10-06
New Economics Papers: this item is included in nep-cmp, nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Liberalization of the Swiss Letter Market and the Viability of Universal Service Obligations (2007)
Working Paper: Liberalization of the Swiss Letter Market and the Viability of Universal Service Obligations (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:6121

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