Postal service markets: an international comparison analysis

Published date01 August 2017
DOIhttp://doi.org/10.1002/pa.1599
Date01 August 2017
Practitioner Paper
Postal service markets: an international
comparison analysis
Massoud Khazabi*
University of Ottawa, Ottawa, Canada
This article contributes to the established strand of literature on post and postal service by providing a quadratic
framework under which national postal markets are analyzed and compared from efciency, protability,and quality
of service standpoints. Sample countries are grouped into four market models based on two attributes of market
structure and ownership. The question of which governance-operation postal model performs best is then answered.
The policy insight offered by this paper expects to guide the advancement of national posts towards an optimal future
design that best meets their specic needs and preferences. Copyright © 2016 John Wiley & Sons, Ltd.
INTRODUCTION
A Post Ofce, according to the Oxford dictionary is
the national organization in many countries that is
responsible for collecting and delivering letters,etc.In
this denition three elements should be underlined.
First, the term responsibleconveys the idea that
post ofce and postal service are synonymous with
universal postal service. We adopt the same
approach throughout this article. Second, there is
emphasis on the fact that postal service is offered
by anational incumbent, which is generally a large
single organization capable of exploiting economies
of scale and scope in the market. Third, letter mail is
the main business of a post ofce in scale, but not
necessarily in scope.
The use of the term universal servicein the
context of post is relatively recent. In the United
Kingdom, for example, the consistent use of this
term began in late 1990s, when postal liberalization
movements started to reduce the extent of public
control.
1
Universal service obligations (USOs
hereafter) refer to the criteria according to which a
baseline level of postal service is uniformly
provided in a country. Rawnsley and Lazar (1999)
see affordable price and access as the main elements
of USOs, whereas Crew and Kleindorfer (2000) de-
ne USOs, from an economic perspective, as the
provision of a ubiquitous service at a uniform price
and quality.Because of USOs, post is a public good:
non-excludable and non-rivalrous in use. Its
optimal provision, therefore, is subject to some form
of government intervention.
The provision of USOs has been subject to major
scrutinies in recent years. On the one hand, postal
markets are being opened to competition. On
another hand, sluggish economies, declining letter
mail volumes, and increasing operation costs (espe-
cially post employment labour costs such as pension
and severance payments) have already placed
extreme nancial pressures on universal service
providers. With the traditional funding mechanisms
for USOs, such as access privileges and patent-like
rights, subsidies, and cross-subsidization of postal
operations being found less effective, modern
regulatory schemes are introduced and universal
providers are forced to revise their operational
structure, their business focus, the extent, and scope
of their USOs, and divest their postal assets, in more
extreme cases.
To study this complex system of dynamic attri-
butes, and conclude who is done best and how,
one needs to introduce a new context within which
*Correspondence to: Massoud Khazabi, 120 University of
Ottawa, Ontario, K1N 6N5, Canada.
E-mail: mkhazabi@uottawa.ca
1
Rowsell, (2015).
Journal of Public Affairs
Volume 17 Number 3 e1599 (2017)
Published online 4 February 2016 in Wiley Online Library
(www.wileyonlinelibrary.com) DOI: 10.1002/pa.1599
Copyright © 2016 John Wiley & Sons, Ltd. 1 of 12

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