Access Pricing in the Postal Sector: Theory and Simulations

This paper studies a theoretical model aimed at assessing the optimal access charges and retail prices in the postal sector. It takes explicitly into account three main characteristics of the postal sector: the ability of entrants to bypass the incumbent’s delivery network; the imposition on the incumbent, but not on entrants of universal service obligations; and the provision of access to both competitors and customers. The paper first develops analytical formulations of the optimal access charges and the incumbent’s end-to-end retail price. It then presents calibrated results illustrating the impact on prices and welfare of various scenarios.