Discussion Papers

Andreas Hense

Qualitätsregulierung und wettbewerbspolitische Implikationen auf Postmärkten
Nr. 255 / September 2004

Summary

An efficient allocation of goods and services implies that the quality provided meets the customers’ preferences. In this regard quality of postal services does not only comprise transit times but also many other dimensions including access to the postal network, reliability of postal services or modes of del ivery. If the effective quality of the postal services provided differs from the basic needs of the customers, there may be a need for regulating quality of service (QoS), e.g. in the form of quality requirements or price cap-formulas allowing for a quality parameter. Against this background QoS regulation in the postal sector is closely linked to the universal service obligation, i.e. the availability of reliable postal services of good quality throughout the county to all citizens at affordable prices. Consequently, QoS regulation forms a part of the universal postal services requirements in Europe an as well as in German legislation.

The intention for QoS regulation may be socio-political, but regulatory interventions could also be motivated by market failure and the need of protection of individual consumers or groups of customers, respectively. Whereas in monopolistic markets all groups of customers are exposed to the risk of exploitation and abuse, after liberalisation market failure may affect particularly individual consumers and small business customers. In order to correct possible unwanted market results selective regulatory actions should be taken.

During the process of liberalisation the risk of market-wide QoS inefficiencies is still very high. Institutional barriers to entry and only gradually evolving market forces strengthen the risk of a market failure. Therefore, there is an essential need for QoS regulation in this stage of market opening. However, QoS requirements may benefit the incumbent. QoS regulation may induce considerable performance enhancements and reputation increases of the incumbent. He could use the competitive edge to deter potential newcomers from market entry. The chances of success for potential entrants may considerably fall off if the QoS level is already very high and the customers’ willingness to pay is nearly utilized. Accordingly, demanding QoS requirements and a slow process of liberalisation may support the emerging market closure. It gives the incumbent the opportunity to substantially prepare for the subsequent competition. In this market environment entry for newcomers may become difficult. Thus, there exists a trade-off between market-wide QoS efficiency and the possible dynamic evolution of workable competition. In the end this dilemma can not be solved. During the successive opening of the postal market this should always be taken into account whenever deciding on implementation, maintenance, reduction or abolition of regulatory measures. [Only German language version available.]

Diskussion Paper is available for download.

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