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Review of Network Economics

Editor-in-Chief: Grzybowski, Lukasz

Ed. by Briglauer, Wolfgang / Goetz, Georg / Pereira, Pedro

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Volume 11, Issue 2


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

Henrik Lindhjem / Simen Pedersen
Published Online: 2012-06-11 | DOI: https://doi.org/10.1515/1446-9022.1345

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.

Keywords: post; universal service; cost-benefit analysis; contingent valuation

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Published Online: 2012-06-11

Citation Information: Review of Network Economics, Volume 11, Issue 2, ISSN (Online) 1446-9022, DOI: https://doi.org/10.1515/1446-9022.1345.

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

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