A BEJEAP Topics article.

Abstract

In this paper, we develop a franchise bidding mechanism for postal services under the Universal Service Obligation (USO) in rural areas. For the collection and delivery of mail on rural routes and for small town counter operations, monopoly franchises are awarded. Deficits caused by the USO are balanced by transfers between the government and the incumbent postal operator, i.e. the franchiser. We analyze the efficiency properties of the mechanism and discuss the drawbacks when extending the mechanism to urban areas.

Submitted: July 12, 2003 · Accepted: March 10, 2004 · Published: April 23, 2004

Originally published in Topics in Economic Analysis & Policy.

Recommended Citation

Borrmann, Jörg (2004) "Franchise Bidding for Postal Services in Rural Regions," Topics in Economic Analysis & Policy: Vol. 4 : Iss. 1, Article 10.
Available at: http://www.bepress.com/bejeap/topics/vol4/iss1/art10