Abstract
Abstract Due to German postal law, franchising of non economic universal services is regarded as the preferred alternative for their allocation in a liberalised market. Unfortunately, there are no practical experiences of such ‘carrier of last resort (COLR) auctions’. Therefore, by the knowledge of auction theory as well as the economics of the postal sector blueprints for suitable COLR-auctions have to be designed by the regulator. In this paper a framework for an COLR-auction on the level of incidental services, mainly for the distribution of letters and parcels in rural areas, is developed. According to the most important economic criteria, allocative efficiency, avoidance of collusion and of a ‘winners curse’, and by taking account of economies of scope, mechanisms for the allocation of non economic universal services are identified. Finally, the rights for the successful bidder to interconnect with market dominating firms are characterised.
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