Managing Change in the Postal and Delivery Industries

427 Pages·1997·14.249 MB·English

by  Michael D. Bradley, Jeff Colvin, John C. Panzar (auth.), Michael A. Crew, Paul R. Kleindorfer (eds.)

MANAGING CHANGE IN THE
POSTAL AND DELIVERY
INDUSTRIES
Topics in Regulatory Economics and Polley Series
Michael A. Crew, Editor
Graduate School of Management, Rutgers University
Newark, New Jersey, U.S.A.
Previously publisbed books in tbe series:
Crew, M.:
Competition and the Regulation of Utilities
Crew, M., and P. Kleindorfer:
Competition and Innovation in Postal Services
Thompson, H.:
Regulatory Finance: Financial Foundations of Rate of Return Regulation
Crew, M.:
Economic Innovations in Public Utility Regulation
Crew, M., and P. Kleindorfer:
The Economics of Postal Service
Crew, M., and P. Kleindorfer:
Regulation and the Nature of Postal and Delivery Services
Oren, S. and S. Smith.:
Service Opportunities for Electric Utilities: Creating Differentiated Products
Kolbe, A. L., W. B. Tye, and S. C. Myers:
Regulatory Risk: Economic Principles and Applications to Natural Gas Pipelines
Pechman, C.:
Regulating Power: The Economics of Electricity in the Information Age
Gordon, R. L.:
Regulation and Economic Analysis: A Critique Over Two Centuries
Blackmon, G.:
Incentive Regulation and the Regulations of Incentives
Crew, M.:
Incentive Regulation for Public Utilities
Crew, M.:
Commercialization of Postal and Delivery Services
Abbott, T. A.:
Health Care Policy and Regulation
Goff, B.:
Regulation and Macroeconomic Performance
Coate, M.B. and A.N. Kleit:
The Economics of the Antitrust Process
Crew, M.:
Pricing and Regulatory Innovations Under Increasing Comptetition
MANAGING CHANGE IN THE
POSTAL ANO OELIVERY
INOUSTRIES
edited by
Michael A. Crew
Graduate School of Management
Rutgers University
Newark, New Jersey, U.S.A.
and
Paul R. Kleindorfer
The Wharton School
University of Pennsylvania
Philadelphia, Pennsylvania, U.S.A.
~.
"
Springer Science+Business Media, LLC
Library of Congress Cataloging-in-Publication Data
A C.I.P. Catalogue record for this book is available from
the Library of Congress.
ISBN 978-1-4613-7902-7 ISBN 978-1-4615-6321-1 (eBook)
DOI 10.1007/978-1-4615-6321-1
Copyright ~ 1997 Springer Science+Business Media New York
Originally published by Kluwer Academic Publishers, New York in 1997
Softcover reprint of the hardcover 1s t edition 1997
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system or transmitted in any form or by any means, mechanical,
photo-copying, recording, or otherwise, without the prior written permission of
the publisher, Springer Science+Business Media, LLC.
Printed on acid-free paper.
CONTENTS
Authors and Discussants vii
Preface and Acknowledgements ix
TheoreUcalPerspecUves
1 Issues in Measuring Incremental Cost in a Multi-Function 3
Enterprise
Michael D. Bradley, Jeff Colvin, and John C. Panzar
2 Cost and Benefits of Universal Service Obligations in the Postal 22
Sector
Helmuth Cremer, Marc De Rycke, and Andre Grimaud
3 Peak Loads and Postal Services: Some Implications of 42
Multi-Stage Production
Michael A. Crew, Paul R. Kleindorfer, and Marc A. Smith
4 Scale Economies and Natural Monopoly in the Postal Delivery: 65
Comparison Between Parametric and Non Parametric
Specifications
C. Cazals, M. de Rycke, J.P. Florens, S. Rouzaud
ErnpiricalPerspecUves
5 A Cross Sectional Comparison and Analysis of Productivity for 83
21 National Postal Administrations
Robert H. Cohen, Edward H. Chu, William W. Ferguson,
and Spyros S. Xenakis
6 A Measure of Scale Economies for Postal Systems 115
Robert H. Cohen and Edward H. Chu
7 Demand Models for Letter Mail and Its Substitutes: Results 133
from Finland
Heikki Nika/i
8 Changes in the Household-Level Demand for Postal Delivery 162
Services from 1986 to 1994
Frank A. Wolak
LegalandlnsUtuUonalPerspecUves
9 The UK Post Office Competition Law Compliance Program 195
Catherine Churchard
10 Monopolies and European Community Competition Law: 205
Current Problems
Christian Courtois
v
vi MANAGING CHANGE IN THE POSTAL AND DELIVERY INDUSTRIES
11 Liberalized Postal Markets: Finnish and Swedish Experiences 214
Pekka Leskinen and Bengt Palmgren
Universal Service Obligation
12 Cost and Returns from Delivery to Sparsely Settled Rural 237
Areas
John Haldi and Leonard Merewitz
13 The Universal Service Obligation for Post: Some Australian 258
Calculations
Maurice Castro and Rodney Maddock
14 The Challenge of Electronic Competition: Empirical Analysis 270
of Substitution Effects on the Demand for Letter Services
Monika Plum
15 Providing Universal Service in Competitive Postal Markets 288
Ulrich Stumpf
16 The Cost of the Universal Postal Service in a Competitive 304
Environment: Lessons from Telecommunications
Catherine Gallet and Joelle Toledano
Policy Perspectives
17 The Roots of Deregulation: Why Aviation and 321
Telecommunications But Not the Post Office?
James I. Campbell, Jr.
18 The Future of the U.S. Postal Service: An Assessment of 342
Options
Lorraine M. Cote and William M. Takis
19 The Structure Of Postal Markets 356
Ian Reay
20 Competition And Rate Restructuring For Postal Services 370
Harold Ware
Postal Strategy
21 Competitor Access To The Postal Pipeline: The New Zealand 389
Experience
John R. Allen
22 Competition In Postal Markets: The German Direct Mail Market 399
Susanne Meier and Thomas Baldry
23 Postal Services: Competition in the Netherlands-Current 417
Situation
Paul Overdijk
AUTHORS AND DISCUSSANTS
Joseph Alexandrovich, U.S. Postal Service
John Allen, New Zealand Post
Thomas Baldry, Deutsche Post-AG
Michael Bradley, George Washington University
Mary E. Bundy, Foster Associates
James I. Campbell, Jr., Attomey
Maurice C. Castro, Australia Post
Catherine Cazals, IDEI
Edward H. Chu, U.S. Environmental Protection Agency
Catherine Churchard, U.K. Post Office
Robert H. Cohen, U.S. Postal Rate Commission
Jeffrey Colvin, U.S. Postal Service
Rand Costich, U.S. Postal Rate Commission
Lorraine Cote, Price Waterhouse LLP
Christian Courtois, La Poste
Helmuth Cremer, Institut D'Economie Industrielle
Michael A. Crew, Rutgers University
Marc De Rycke, La Poste
Jean-Pierre Florens, Institut D'Economie Industrielle
Per Forssberg, Sweden Post
Catherine Gallet, La Poste
Jos Geeraerts, PTT Post BV
Andre Grimaud, Institut D'Economie Industrielle
John Haldi, Haldi Associates, Inc.
Malcolm Harris, U.S. Postal Service
Philip Hatfield, Consultant
Heinz Hofmann, Federal Office for Posts & Telecommunication, Germany
Paul R. Kleindorfer, University of Pennsylvania
Marshall Kolin, U.S. Postal Service
William E. Kovacic, George Mason University Law School
Pekka Leskinen, Finland Post
Maurice Levy, IREPP
Rodney Maddock, La Trobe University
Virginia Mayes, U.S. Postal Service
James McAleenan, Foster Associates
vii
viii MANAGING CHANGE IN THE POSTAL AND DELIVERY INDUSTRIES
Susanne Meier, Deutsche Post-AG
Leonard Merewitz, Whitfield Russel Associates
Eric Merkel-Sobotta, European Express Organization
Robert Mitchell, U.S. Postal Rate Commission
Malin Moench, U.S. Postal Rate Commission
Klaus Muller, Deutsche Post AG
Heikki Nikali, Finland Post
Donald J. O'Hara, U.S. Postal Service
Bill Osborne, New Zealand Post
Paul Overdijk, PTT Post BV
Bengt Palmgren, Sweden Post
Virpi Palo, Finland Post
John C. Panzar, Northwestern University
Mary Perkins, Howard University
John Pickett, U.S. Postal Service
Monika Plum, WIK
Bill R. Price, Canada Post
David Rawnsley, LlNX, Division of A.T. Kearney
Ian Reay, U.K. Post Office
John Reynolds, U.S. Postal Service
Alan Robinson, Direct Communications Group
Cathy M. Rogerson, U.S. Postal Service
Wayne Schley, United Parcel Service
Linda Shepherd, United Parcel Service
Edward S. Smith, U.S. Postal Service
Marc A. Smith, U.S. Postal Service
Nancy Sparks, Federal Express Corp.
Ulrich Stumpf, WIK
William M. Takis, Price Waterhouse
Joalle Toledano, La Paste
David Treworgy, Price Waterhouse
Tim Walsh, Royal Mail International
Harold Ware, National Economic Research Associates
Frank A. Wolak, Stanford University
PREFACE AND ACKNOWLEDGEMENTS
This book arises out of the Fourth Bi-Annual Conference on Postal and Delivery
Services, held in Monterey, California, May 22-25, 1996. Leading practitioners,
world-wide postal administrations, and the express industry, as well as a number
of regulators, academic economists, and lawyers came together to examine some
of the important policy and regulatory issues facing the industry. Issues addressed
included international postal policy; the universal service obligation; regulation;
competition, entry and the role of scale and scope economies; the nature and role
of cost analysis in postal service; productivity; interaction of law and economics;
and service standards.
The conference and the book follow our earlier conferences. In 1990, a confer
ence was held at Coton House, Rugby, England, July 22-25, 1990, in honor of the
one hundred and fiftieth anniversary of the Penny Post and the contribution of Sir
Rowland Hill. The ensuing book Competition and Innovation in Postal Services,
was published by Kluwer Academic Publishers in 1991. In 1992, Regulation and
the Evolving Nature of Postal and Delivery Services: 1992 and Beyond was held
at Village PTT, La Londe les Maures, France, on March 18-21, 1992. This
conference resulted in Regulation and the Nature of Postal and Delivery Services,
published by Kluwer in 1993. Both conferences were recognized by the European
Express Organization with the Hermes Award 1992 at its annual award dinner in
Munich on June 22, 1992. The first workshop, The Workshop on Postal and
Delivery Economics, was held June 23-26,1993 in Daun, Germany. In 1994, both
a Conference in Stockholm, Sweden, May 18-21, 1994, and a workshop, in Hakone,
Japan, June 1-4, 1994, took place. These combined to produce the volume
Commercialization ofP ostal and Delivery Services, published by Kluwer in 1995.
A workshop was held in Naantali, Finland, June 7-10, 1995.
The 1995 Workshop and the 1996 Conference were made possible by the support
of the following organizations: The Rutgers University, Graduate School of Man
agement, Center for Research in Regulated Industries, The University of Penn
sylvania, Wharton School, Center for Risk Management and Decision Processes,
The British Post Office, La Poste, The United States Postal Service, The Swedish
Post Office, Canada Post, Deutsche Post AG, Federal Express, Finland Post, United
Parcel Service, The United States Postal Rate Commission, the European Commis
sion, Price Waterhouse, New Zealand Post, Coopers & Lybrand, and Finland Postal
Regulator. We would like to thank sponsors not only for financial support but also
ix
x MANAGING CHANGE IN THE POSTAL AND DELIVERY INDUSTRIES
for their advice and encouragement and for serving on the organizing committee.
These include John Allen, James Campbell, Doyle Cloud, Robert Cohen, Jeff
Colvin, Frank Heselton, Wynne Jones, Virpi Palo, Bill Price, Oluf Raldorf, Ian
Reay, John Reynolds, Paul Richards, James Rogers, Cathy Rogerson, Marc Smith,
Nancy Sparks, WalpurgaSpeckbacher, Borge Spong, David Storer, William Takis,
Elmar Toime, JodIe Toledano, David Treworgy, Sture Wallander, and Anton van
der Lande. In addition, we would like to thank Asko Saviaho, Chief Executive,
Finland Post; Edward J. Gleiman, Chairman, U.S. Postal Rate Commission; and
Michael Riley, Senior Vice President and Chief Financial Officer, U.S. Postal
Service. Each, through his keynote speech, provided a unique perspective on the
problems facing postal and delivery networks.
Finally, we must thank Linda Brennan, Administrative Assistant in the Center
for Research in Regulated Industries, for her efforts in making this book possible.
In addition, to her usual duties of copy-editing and typesetting, she had the difficult
task of collecting the papers. This was no mean task in view of the number and
scattered nature of the contributions. We would like to thank her not only as editors
but on behalf of the authors too. We would also like to thank Kathleen Rutledge
of the Center for Research in Regulated Industries for her valuable assistance with
the Conference and Workshop and with the production of this volume and Nathan
Benjamin for his editorial assistance. The usual disclaimers are applicable. None
of the people named here is responsible for any errors. The views expressed are
the views of the authors and are not necessarily those of the sponsors.
MICHAEL A. CREW
PAUL R. KLEINDORFER