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Licensed Unlicensed Requires Authentication Published by De Gruyter June 11, 2012

Should Publicly Funded Postal Services be Reduced? A Cost-Benefit Analysis of the Universal Service Obligation in Norway

  • Henrik Lindhjem and Simen Pedersen

We conduct, to our knowledge, the first cost-benefit analysis of the universal service obligation (USO) in the postal sector. Three alternatives are analysed that reduce delivery frequency and/or delivery speed, with particular emphasis on quantifying the potential loss of consumer benefits. Social cost savings are analysed for the service provider, for the environment and for the government through lower levels of distortionary taxes. Although there are challenges involved in measuring the net welfare change, especially loss in consumer benefits, our results suggest that only the largest reduction in the USO may be justified on social efficiency grounds.

Published Online: 2012-6-11

©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

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