I remember learning in IOPP that the U.S. Postal Service is a government control, government lead monopoly. With little or no competition the U.S. Postal Service is able to provide the same prices to everyone in the country. This system works more efficient as a monopoly because of network economics. For example, if postal company A provides services to residents in Lansing and postal company B provides services to residents in Detroit, consumers and firms would both have to face transaction costs whenever someone from Lansing wanted to mail a letter to someone in Detroit. Postal service in general works more efficiently as a government regulated monopoly.
I remember learning in IOPP that the U.S. Postal Service is a government control, government lead monopoly. With little or no competition the U.S. Postal Service is able to provide the same prices to everyone in the country. This system works more efficient as a monopoly because of network economics. For example, if postal company A provides services to residents in Lansing and postal company B provides services to residents in Detroit, consumers and firms would both have to face transaction costs whenever someone from Lansing wanted to mail a letter to someone in Detroit. Postal service in general works more efficiently as a government regulated monopoly.
ReplyDelete