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Do opening hours and unobserved heterogeneity affect economies of scale and scope in postal outlets?

Massimo Filippini (), Martin Koller and Urs Trinkner ()

Quaderni della facoltà di Scienze economiche dell'Università di Lugano from USI Università della Svizzera italiana

Abstract: The purpose of this study is to analyze the cost structure of Swiss Post’s postal outlets. In particular, the idea is to assess economies of scale and scope in post offices and franchised postal agencies. Information on their optimal size and production structure is of importance from the policy-makers’point of view because this hypothetical situation may be a basis for calculation of reimbursements when providing the universal service. Two important novelties are introduced in this study. First, the latent class model accounts for postal outlets with different underlying production technologies, caused by unobserved factors. Second, the cost model includes standby time as an indicator of public service because regulated accessibility and negotiated opening hours that enhance public service frequently lead to opening hours that exceed the time necessary to operate the demand. Overall, this analysis confirms the existence of increasing unexploited economies of scale and scope with falling outputs in the Swiss Post office network. Furthermore, the results for the latent class model point to the existence of unobserved heterogeneity in the industry.

Keywords: economies of scale; economies of scope; postal outlet network; unobserved heterogeneity; latent class model; opening hours; standby time (search for similar items in EconPapers)
JEL-codes: C21 C81 D24 H42 L92 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2010-04
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