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...

Market opening in the postal sector invites competition, but it may also present challenge to financing the universal service obligation (USO) currently in place. USO financing under entry is challenged both by the loss of revenues and scale economies in combination with the affordability...

In this paper we discuss an incumbent postal operator’s incentives to invest in an innovation in the face of upcoming liberalization and deregulation of the letter market. Our contribution is a short description of recent innovations in the Swiss mail market and their interpretation in light...

This paper relates to the current discussion about how to measure the net cost and unfair burden of universal service provision in network industries. The established profitability cost approach compares the profit of a universal service provider (USP) with and without a universal service...

The financing of universal service provision in the postal sector has traditionally relied on granting the universal service provider a reserved area. Together with growing electronic substitution, current liberalization policies promoting competitive entry may put the traditional universal...

In the past decades, several countries have introduced reverse auctions for allocating universal service or public mission subsidies in various industries. Examples include urban transport, air transport and telecommunications. Recently, such mechanisms have also been envisioned in liberalized...

The paper analyzes consumer preferences towards a potential two-part tariff in the postal sector. Based on the empirical results we analyze the welfare effects of a two-part tariff when applied in the Swiss letter market.

The paper presents the basic approaches to calculate the cost of the USO and compares them with the requirements of the 3rd postal directive. We conclude that the profitability cost approach will lead to consistent estimations if it is applied in a global way. We illustrate our findings with an...

The paper analyzes recent restructurings of post office networks. Based on these findings an on a time-series estimation of the impact of Swiss Post’s recent realignment of its network on overall mail demand we derive three generic strategies for the long term alignment of Post office networks.

We analyze whether it makes sense to auction off Universal Service Obligations in postal markets. Based on auction theory, case studies and sector-specific considerations we conclude that auctions will be difficult to implement in the postal sector.