The Future of the Postal Monopoly: American and European Perspectives After the Presidential Commission and Flamingo Industries

31 Pages Posted: 14 May 2003 Last revised: 11 Oct 2014

See all articles by Damien Geradin

Damien Geradin

EUCLID Law; Tilburg Law & Economics Center (TILEC); University College London - Faculty of Laws

J. Gregory Sidak

Criterion Economics, L.L.C.

Abstract

In December 2002, President Bush established the Presidential Commission on the United States Postal Service for the purpose of proposing how government provision of mail delivery services might be reformed or transformed. The Commission reported in July 2003 that the Postal Service should not be privatized but rather should remain a public entity that would increasingly be run like a commercial enterprise. In 2004, however, the Supreme Court moved the Postal Service farther away from being a true commercial enterprise when it held in the Flamingo Industries case that the agency is immune from antitrust law. In this article, we argue that the Postal Service already operates like a commercialized governmental enterprise and that pursuing that path even further would increase rather than decrease the problems faced by the U.S. postal sector. Although we support privatization, that option may not be politically feasible. Consequently, we examine how postal reform might proceed incrementally in the form of an improved government agency. That approach would entail two broad principles for postal reform. The first is to define the Postal Service's mission in terms of remedying conditions of market failure. That goal encompasses universal service, quality of service, and reasonableness of rates. The second broad principle is to avoid competitive distortions through the pricing and product offerings of the Postal Service. This principle entails avoiding government production in markets that are or can be served satisfactorily by private firms, as well as avoiding discrimination among mailers and among competitors in secondary markets. We then present specific recommendations that would advance these two broad goals if the Postal Service remains an agency of the federal government. Those recommendations encompass costing, universal service, rate design and mail classification, the postal monopoly, and market entry and exit — as well as legislative reversal of Flamingo Industries.

JEL Classification: K2, L2, L3, L4

Suggested Citation

Geradin, Damien and Sidak, J. Gregory, The Future of the Postal Monopoly: American and European Perspectives After the Presidential Commission and Flamingo Industries. World Competition, Vol. 28, No. 2, pp. 163-198, 2005. Available at SSRN: https://ssrn.com/abstract=397080 or http://dx.doi.org/10.2139/ssrn.397080

Damien Geradin

EUCLID Law ( email )

Brussels
Belgium

Tilburg Law & Economics Center (TILEC)

Tilburg, 5000 LE
Netherlands

University College London - Faculty of Laws ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

J. Gregory Sidak (Contact Author)

Criterion Economics, L.L.C. ( email )

1717 K Street, N.W.
Washington, DC 20006
United States
(202) 518-5121 (Phone)

HOME PAGE: http://www.criterioneconomics.com

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