Cross Subsidies: The Postal Sector Case
Revista de Economía Institucional, Vol. 8, No. 15, Second Semester 2006
18 Pages Posted: 4 Dec 2006
This document offers a theoretical price regulation model for the postal sector to evaluate the existence of cross subsidies between the regulated and competitive parts of the postal sector. It analyzes agents' incentives to use cross subsidization when prices are regulated by the Ramsey prices or by the global price cap. It shows that cross subsidies constrain and distort the liberalization of the sector and it is important to avoid them in favor of competition.
Keywords: postal sector, regulation, cross subsidies
JEL Classification: D42, L51, L87
Suggested Citation: Suggested Citation