Regulating Postal Prices: A Five-Country Study
Posted on March 5th, 2017

Since the passage of the Postal Accountability and Enhancement Act (PAEA) in 2006, price increases for U.S. Postal Service market dominant products have been limited by a price cap based on the Consumer Price Index (CPI). To compare U.S. practices with those of posts in other countries, the USPS Office of Inspector General asked the consulting firm WIK-Consult (WIK) to provide research on how postal prices are regulated in five countries: Australia, Canada, France, Germany, and the United Kingdom. The report, Lessons in Price Regulation from International Posts, was released on February 8, 2017.
 
The selected countries have posts with high volumes of mail and large geographic regions. They include countries with price regulation approaches that differ from the United States, including countries that have some form of price regulation that is not a price cap (Australia and Canada). Other represent a variety of price cap regimes: Germany has a price cap formula, France has a forward-looking cap that uses forecasted cost and revenue information, and the United Kingdom has a very limited “safeguard cap.”
 
The price regulation regime in the five countries has changed at least once, if not more, over the last decade. These changes have allowed for increased pricing flexibility in one of two ways. The first is by decreasing the scope of products that fall under price regulation. The second way that price regulation regimes have changed is by modifying how allowable price increases are calculated
 
In the United States, all market dominant products fall under the CPI-price cap, and, all told, market dominant products encompass 97 percent of total mail volume and 76 percent of total mail revenue. In contrast, price regulation in other posts has allowed price increases that are above inflation. In WKI’s view, higher price increases have helped, in part, to stabilize the financial positions of the five posts studied.
 
The full report, Lessons in Price Regulation from International Posts, can be found here.



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