Calculating the net cost of home delivery

Andreas Haller, Christian Jaag and Urs Trinkner

No 41, Working Papers from Swiss Economics

Abstract: This paper analyzes whether frequency of delivery and nationwide coverage obligations constitute USO net costs. With no USO on home delivery in place, the USP may be able to increase profits by optimizing its delivery services. Three such optimizations are scrutinized in detail: (1) adjusting the number of weekly delivery days, (2a) discontinuing delivery services to certain areas and (2b) adjusting the place of delivery for households that are particularly costly to serve. The first measure relates to the frequency of delivery obligation, whereas the latter two concern the requirement of nationwide coverage of home delivery. Under robust demand assumptions both frequency and coverage obligations constitute USO net costs. The USO in delivery hence represents binding constraints on operators.

Keywords: Universal service obligation; Postal sector; Net cost; Delivery (search for similar items in EconPapers)
JEL-codes: L51 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-reg
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Citations: View citations in EconPapers (2)

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