DETERMINING the rate elasticity of different mail classes, that is, the way the mail volume responds to changes in postal rates, is a necessary prerequisite to the rate-making activities of the United States Postal Service. The need for estimates of price elasticities of mail services is accentuated by the prevalence of common costs in most of the mail categories. This study of the price elasticity of demand for parcel post mail represents an addition to the growing literature on the subject, literature which is reviewed next. The basic evidence on demand elasticities for the postal services analyzed in this report comes from several sources, mainly the McKinsey & Company [io] report on postal rate impacts, the work of Arthur D. Little & Company for the President's Commission on Postal Organization [14], and the Economic Analysis Division of the U.S. Postal Service [I8] analyses of price elasticities of mail volumes. Based on a mix of a priori economic analyses of the extent of possible substitution of postal for other services, as well as on ordinary least squares regression analyses of a time series of postal volume against prices, population, and income among variables, the first two studies found: