University of St. Gallen University of Zürich Jaag/Trinkner - 1 Tendering Universal Service Obligations in Liberalized Postal Markets An Outline of Thought Christian Jaag University of St. Gallen and Swiss Post Urs Trinkner University of Zürich and Swiss Post GPREN Postal Research Conference April 28th 2008
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University of St. Gallen University of Zürich Jaag/Trinkner - 1 Tendering Universal Service Obligations in Liberalized Postal Markets An Outline of Thought.
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University of St. GallenUniversity of Zürich
Jaag/Trinkner - 1
Tendering Universal Service Obligations in Liberalized Postal Markets
An Outline of Thought
Christian Jaag University of St. Gallen and Swiss Post
Urs Trinkner University of Zürich and Swiss Post
GPREN Postal Research ConferenceApril 28th 2008
University of St. GallenUniversity of Zürich
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Introduction
• Tendering is often used to confer to someone – a right (e.g. to use a certain spectrum for mobile
telecommunication)– A duty (e.g. to build a tunnel across the alps)In these cases, the winning party usually operates ina well defined market environment.
• Recently, tendering has also been used to assign universal services, e.g. in telecommunications.What will the market environment be?
• In the postal market Tendering of postal USO envisioned in Germany, Netherlands, Switzerland.
University of St. GallenUniversity of Zürich
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Public Procurement
Public provision Contracting
TenderingNegotiation
Definition of a package of duties and rights, possibly including exclusivity
• Distributive options– Ex ante compensation (based on estimated cost)– Ex post compensation (based on „true“ cost)
• Goal: Efficient provisiona) By most efficient operator selection problem b) With most efficient technology incentive problemc) At the lowest possible public cost transfer problem
University of St. GallenUniversity of Zürich
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Tendering USO will solve all problems…
Why?It applies market forces where a market would otherwise not exist „competition for the market“
Why not?Competition has to be well designed to workproperly…
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Simple Case: Homogeneous Operators
• Winner‘s curse: The operator who underestimates the cost the most wins the auction High risk taken by bidding operators
• If operators realize this, they ask for a high price!• If operators do not realize this: Renegotiation!
Given its „design cost“, USO tendering is expensive;the transfer problem remains unsolved.
True cost no selection/ incentive problems
Cost estimates
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The Net Cost of Providing Universal Service
The net cost of providing universal services depends on