Cross Subsidies: The Postal Sector Case

Revista de Economía Institucional, Vol. 8, No. 15, Second Semester 2006

18 Pages Posted: 4 Dec 2006

See all articles by Leslie Bravo Chew

Leslie Bravo Chew

Universidad Carlos III de Madrid

Luis F. Gamboa

Universidad del Rosario

Abstract

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

Bravo Chew, Leslie and Gamboa, Luis F., Cross Subsidies: The Postal Sector Case. Revista de Economía Institucional, Vol. 8, No. 15, Second Semester 2006, Available at SSRN: https://ssrn.com/abstract=948718

Leslie Bravo Chew (Contact Author)

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

Luis F. Gamboa

Universidad del Rosario ( email )

Calle 12 No. 6-25
Bogota, DC
Colombia

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