Discussion Papers

Ulrich Stumpf

Sollte der Postzeitungsdienst zur Pflichtleistung erklärt werden? - Entscheidungshilfen aus wirtschafts- und medienpolitischer Sicht
Nr. 73 / November 1991


This discussion paper presents an analysis of whether postal delivery of newspapers and periodicals should be made a mandatory service. From an economic policy point of view, a postal service should only be declared a mandatory service if two conditions are fulfilled. First, the unregulated market produces outcomes which are economically inefficient (market failure in the traditional sense) or are in conflict with non-economic political goals. Second, there are no alternative regulatory devices associated with a lesser economic cost than a mandatory service. With regard to newspaper and periodical delivery, both conditions are not simultaneously fulfilled, and therefore, it is argued, postal newspaper and periodical delivery should not be made a mandatory service.

Among others, this paper reaches the following conclusions. First, as long as the postal administration is obliged to supply a nationwide delivery network for letters, it has an economic incentive to offer nationwide delivery of newspapers and periodicals as a competitive service (if there is a market demand for it). Postal pricing policy in an unregulated market is conditioned by competition; market entry of an alternative delivery service is an especially powerful competitive threat.

Second, we can expect that a competitive market will result in economically efficient results. Moreover, an economic analysis shows that, we must not fear any conflicts with the goals of freedom of information , freedom of the press, diversity of the press or formation of public opinion. Market failure could only emerge if we introduce political value judgements and consider total demand for press products or the diversity of press products demanded as socially suboptimal. A mandatory service with an appropriate tariff structure might enable some marginal press suppliers to survive and, therefore, further freedom of the press. However, even with a reduced tariff level, an increase in total demand for press products is unlikely, as price elasticity of demand is rather small.

Third, a mandatory service with a reduced tariff level and a non cost-related tariff structure would generate economic inefficiencies. The same beneficial results with regard to diversity of the press could be reached at a much lesser economic cost if smaller editors would receive a direct subsidy, e.g. preferential interest rates for investments.

[Only German language version available.]

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