Monopoly Of The United States Postal

If I were the current CEO for the United States Postal Service, I would be gravely concerned about the future of my business, as it has recently taken a steep plummet from its success and popularity in the 19th and 20th centuries. The USPS is now faced with the decision to renovate itself due to the extreme loss of business as technology takes over the 21st Century. Some say that the USPS should be entirely reconstructed because the business is only headed further downhill, while others say that paper mail is still very practical, more so than e-mail, and we must each write more letters to do our part in reviving the business to profitability again. Because the USPS has been such a vital part of our country through

This graph is specific to an oligopoly and shows the change in quantity demanded in relation to the change in price for both elastic and inelastic goods. Total Revenues will be increased, if the firm decreases their price but increase their quantity. Due to the fact that the costs remain the same, the revenue line on the graph can be seen to be steeper than the costs meaning that the profit is higher. The graph therefore also indicates the point where the firm is able to make the most amount of profit, in relation to the price they set and the quantity they produce.

The Express mail industry in the United States had a volume of $16-17 billion on expedited shipments in the year 1996. In the years before shipment volumes has risen 15-20% per year. However due to higher competition prices have fallen which resulted in a rise of only 10-15% in total revenues. As an example of this stands the revenue and the operating margin of the biggest player that make up 45% of the market. Federal Express’ revenue has more than quadrupled in the ten years prior 1996, however its operating margin has more than halved. (Exhibit 2) The

There is still a need for the United States Postal Service (USPS) today then just as anytime during the history of the United States. The USPS provides valuable and equitable services to all Americans everywhere in the United States, regardless of distance from their nearest post office. “Universal Service” a key term provided in an article by the Bloomberg Business week journal, describes what the USPS provides. The cost of delivering mail in rural communities is much higher than in urban areas. The USPS chief executive officer stated “You cannot charge 46 cents to deliver a letter by snowmobile in Alaska and make it work” (Bloomberg Business, 2014). Privatization of the USPS would possibly cause regional price differences that can place many Americans in rural areas at a

If the mail monopoly were removed, then private companies would quickly gain control of the most profitable routes, leaving the postal service with universal obligations but no profits and therefore no funding with which to serve these routes. Many economists have challenged this urban to rural subsidy. In a testimony to the President’s Commission, Robert H. Cohen, an economist and the Director of Office of Rates at the USPS, demonstrated evidence that universal service does not depend on a postal monopoly. In regards to the urban to rural cross subsidy, Cohen (2003) claimed that “the proportion of unprofitable routes in the U.S. is approximately the same for urban and rural areas” (pg.2). Cohen conducted this study by examining “rural carrier routes” and created a list of these routes ordered by the number of mail boxes delivered per mile of the route (pg. 14). Since these rural routes inevitably include some urban routes as well, Cohen (2003) only looked at the bottom 60% of his list, or those routes which deliver the least amount of mail (pg.14). He found that of these routes, 53.1% are profitable and 46.9% are unprofitable earning a total profit of $175 million in 1999 (pg. 14). In comparison, 56.5% of the urban routes that he looked at were profitable and 43.5% were unprofitable earning a total profit of

In Daniel Stone’s editorial article, “Flying Like an Eagle”, he advises the USPS some guidance to boost up their profit and their usage to the community. One of his inputs on the

The Post Office Department known as the United States Postal Services (USPS) (Annual Report, 2009) today, is a dominate player in the mail delivery arena and has been existence since 1776. The Post Office was originally a governmental agency, but due to mismanagement by Congress, was reorganized in 1971 and no longer a part of the presidential cabinet; but became an independent establishment of the executive branch of the Government. To date, the USPS maintains a monopoly on the day-to-day delivery of mail but competitors do share the market on some of the other types of deliveries; shares the market on some of the other types of deliveries (i.e. express

Congress also imposes various obligations on the USPS, like delivering mail at uniform price throughout the nation, that only make the USPS financial situation worse. While residents see these price guarantees as a benefit, the uniform price guarantee only adds to the financial strain. Now competitors, UPS and FedEx, are providing competition on package delivery services that the USPS cannot compete with, because of Congress, creating greater revenue losses. One of very few benefits the USPS receives from its association with congress is its monopoly over first class and standard mail. With increasing technological advancements that allow Americans bypass the USPS all together makes the USPS monopoly over first class and standard mail delivery obsolete, making Congress even more of an obstacle. Other countries who have repealed the monopoly of their mail services, like New Zealand and Sweden, have shown this competition to be beneficial. The EU moved in 2008 to eliminate monopolies of mail services by 2013 in all member states. Without this monopoly in the United States, other first class and standard mail service companies would be able to participate in the market and perhaps do it more efficiently, driving the USPS towards efficiency also. Also, by privatizing the USPS it would allow the USPS to diversify and expand

In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge high prices.[4] Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market).[5]

The Privatization of Royal Mail Maastricht  University   School  of  Business  and  Economics   Maastricht,  5th  April  2014   Wall,  Sebastian  (SW)   ID  numbers:   I6029483   Course  code:     Group  number:  1   Tutor’s  name:    Professor  Hans  van   Mierlo   Writing  Assignment:  Final  Paper         1   Executive   Summary      

The Postal Service cannot continue to provide affordable, universal service to all areas of the country while maintaining mandated inflation-based prices without an increased ability to generate revenue and control costs. Therefore, bold changes to the business model are needed. All options – even those that have been dismissed in the past – need to be considered as part of the national discussion. In order to choose the best business model for the Postal Service, it is important first to establish the future role of the Postal Service and the mission the nation needs it to fill.

In conclusion, our group are agrees with the statement. It is because when the company is supported by the government, the company can more easy to control all the market in their focus area like the USPS. When the country’s economy is monopoly market, there must be barriers preventing competitors from entering the market. It is because the government is just allowing one firm the exclusive right to sell the goods or services such as patents or copyright and licenses. One of the example of pure monopoly is the United States Postal Services (USPS) in the United States. Even USPS is facing the problem of losing money, but in the United States also don’t have any business entered to compete with the Post Office for standard mail delivery because

In this report we focus on the two main competitors in the package delivery industry: Federal Express Corporation (FedEx) and United Parcel Service of America, Inc.

The USPS is at a point where it does not have the financing available to maintain its operations. One reason for the annual net losses is due to the declining rate of first-class mail. The second reason has to do with the required prepayment of $5.5 billion per year toward retirees’ healthcare costs. In order for the USPS to overcome this deficit, they will need to consider their short time frame, government restrictions and labor union backfire in considering the best alternative. One alternative would be to privatize postal services operations which would allow the USPS to change its pricing structure, yet it would potentially significantly reduce market share. A second alternative would be to undergo a system-wide

There is only one model for monopoly and one for perfect competition but in contrast to these oligopolies have several models to try to explain how they react, examples of these are the kinked demand curve, Bertrand and Cournot models. A non competitive oligopoly is ‘a market where a small number of firms act independently but are aware of each others actions’ (Oligopoly, Online). In perfect competition no single firm can affect price or quantity this is due to intense competition and the relative small size of the firms, on the other hand there is a monopoly market where there is little or no rivalry and firms have control over the market. Oligopoly is a state in-between perfect competition and monopoly where the firm can change its