Quantity Discounts in the Postal Sector

Abstract

As policy makers and researchers have acknowledged, there are inherent tensions between maintaining a Universal Service Obligation (USO) combined with full market opening (FMO). These tensions are exacerbated by serious intermodal competition in the form of electronic substitution for both advertising and transactions mail and were examined in Crew and Kleindorfer (2011). C-K demonstrated that retaining volumes by the USP is fundamental to retaining economies of scale in delivery, which are essential aspects of both the USO and remaining financially viable.