Discussion Papers

Wolfgang Elsenbast

Ausschreibung defizitärer Universaldienste im Postbereich
Nr. 176 / August 1997


Due to the draft postal law, franchising of non economic universal services will be regarded as an alternative to the traditional approach to charge the market dominating firm to offer these services. The type of franchising analysed is known in the literature as ‘carrier of last resort auctions’. Due to the desired efficiency of the carrier of last resort auctions, the direct compensation which has to be paid for the provision of non-economic universal services should be the highest possible compensation. Further, only uneconomic universal services should be auctioned which are able to attract bidders at compensations lower than the highest possible compensation. These services can be identified by a preliminary procedure.

An important characteristic feature of postal services are the large differences in costs of local delivery. Therefore, we propose particulary to franchise the non economic delivery of universal postal items at the offices of distribution level. We further think that the following incidental services can be auctioned if they can be proofed to be non-economic: The distribution of parcels either at the office of distribution level or at the level of delivery routes, non-economic window services. Alternatively, a carrier of last resort auction for letter services may be established for a local letter service network which includes delivery, collection at the offices of distribution level and the provision of window services for letters and parcels. A similiar carrier of last resort auction for parcels services may include collection and distribution including or excluding the provision of window services.

Carrier of last resort auctions might be endangered by collusive agreements if there are only few enterprises which are interested in the provision of the non-economic incidental services. Consequently (simultanous) one-round-sealed-bid-first-price auctions should be prefered if there is a limited number of bidders. Alternatively, if a carrier of last resort auction will attract a larger number of bidders, simultanous multiple-round sealed-bid-first-price auctions can be seen preferable. If the danger of collusion is unknown, the preliminary procedure (e.g. the number of potential bidders) can be used for improving the decision-making. Further, if economies of scope between different uneconomic incidental services are important, simple forms of combinatorial bids should be considered. In case of economies of scope and a low danger of collusion simultanous one-round-sealed-bid-second-price auctions (with combinatorial bidding) can be seen as an alternative to simultanous multiple-round-sealed-bid-first-price auctions.

Additional features of the auction mechanism will be identified in this paper. An outstanding feature of the franchising process should be to enable an efficient service provider succeeding in the bidding process to acces to the network if it is not a market dominating firm. Therefore, the successful bidder should be enabled to interconnect the market dominating firm at a fixed price.

Only German language version available.

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