Calculating the Cost of the Universal Service Obligation: The Need for a Global Approach

Jaag, Christian; Koller, Martin; Trinkner, Urs

doi:10.4337/9781848447288.00014

Cited by 9 publications

(5 citation statements)

References 15 publications

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“…13 The median value is better suited as an approximation point than the mean value, as it is less affected by outliers. 14 This is an updated version of the data used by Jaag et al (2009). We had to exclude four of the post offices and seven of the agencies due to missing values for total costs.…”

Section: Previous Studies On Economies Of Scale and Scopementioning

confidence: 99%

Economies of scale and scope and opening hours in post offices and agencies

Filippini¹,

Koller²,

Trinkner³

2010

Heightening Competition in the Postal and Delivery Sector

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The purpose of this study is to analyze the cost structure of Swiss Post's postal outlets. In particular, the idea is to assess economies of scale and scope in post offices and franchised postal agencies.Information on their optimal size and production structure is of importance from the policy-makers' point of view because this hypothetical situation may be a basis for calculation of reimbursements when providing the universal service. Two important novelties are introduced in this study. First, the latent class model accounts for postal outlets with different underlying production technologies, caused by unobserved factors. Second, the cost model includes standby time as an indicator of public service because regulated accessibility and negotiated opening hours that enhance public service frequently lead to opening hours that exceed the time necessary to operate the demand. Overall, this analysis confirms the existence of increasing unexploited economies of scale and scope with falling outputs in the Swiss Post office network. Furthermore, the results for the latent class model point to the existence of unobserved heterogeneity in the industry.

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Section: Previous Studies On Economies Of Scale and Scopementioning

confidence: 99%

Economies of scale and scope and opening hours in post offices and agencies

Filippini¹,

Koller²,

Trinkner³

2010

Heightening Competition in the Postal and Delivery Sector

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“…still, the government might desire to estimate the cost of the Uso in advance to ensure that the necessary funds are available. similarly, if it anticipates that only a view operators will participate in the bid, it might define some maximum subsidies according to its own estimations.15an overview is provided by oxera(2007) orJaag, koller and trinkner (2009).…”

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confidence: 99%

Tendering Universal Service Obligations in Liberalized Network Industries

Jaag¹,

Trinkner²

2009

Competition and Regulation in Network Industries

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In the past decades, several countries have introduced reverse auctions for allocating universal service or public mission subsidies in various industries. Examples include urban transport, air transport and telecommunications. Recently, such mechanisms have also been envisioned in liberalized postal markets. Issuing an invitation to tender for obligations in otherwise liberalized markets significantly differs from auctioning off a monopolistic provision of services or goods ("competition for the market"), as is e.g. the case with spectrum auctions in the telecommunications sector. We discuss the rationale for introducing such a regulatory regime as well as conceptual and practical issues concerning its implementation. It turns out that designing an efficient tender for universal service subsidies in liberalized markets is considerably more difficult than tendering e.g. a monopoly franchise. A first reason is that the cost assessment is more complex in the former case as future competitive market outcomes have to be anticipated; in the case with franchise bidding, at least the number of competitors is given by the tender itself. Hence, revenue effects caused by competitors are easier to calculate. Second, the threat of a winner's moral hazard requires more detailed ex ante regulations. These raise the social cost of universal service provision. Compared to direct designation of universal services with ex post compensation, tendering causes a series of fundamental concerns and trade-offs that make the application of auctions less attractive than in other sectors.

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“…for a discussion.17Note that a fair compensation requires a correct estimation of the costs of the USO. SeeJaag et al (2009) for a treatment of the subject.…”

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confidence: 99%