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Universal Service Obligations in the Postal Sector: Endogenous Quality and Coverage ∗
| Content Provider | Semantic Scholar |
|---|---|
| Author | Calzada, Joan |
| Copyright Year | 2005 |
| Abstract | The liberalization of the postal sector endangers the maintenance of the universal service obligations. This paper examines the eects of entry when an incumbent operator is regulated with uniform price and quality constraints. I consider that the cost of a unit of mail depends on its quality and on the location of the senders. Senders have inelastic demands and dier in their willingness to pay for quality. The incumbent and one entrant play a three-stage game, first choosing which villages they cover, then the quality of the letters and finally the price. Valletti, Hoernig and Barros (2002) show that when an incumbent is regulated with a uniform pricing constraint the entrant chooses a low level of coverage to increase the incumbent's uniform price. Here, I show that when the qualities are determined endogenously the entrant can establish a higher level of coverage because he takes advantage of the lower competition to increase the level product dierentiation and rise the incumbent's price. I also explain |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://idei.fr/sites/default/files/medias/doc/conf/pos/papers_2006/calzada.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
