US Postal Regulatory Commission

Quantification of financial transfers caused by Universal Postal Union Terminal dues

The Universal Postal Union (UPU) system of terminal dues governs payments between designated postal operators for the transport, sorting, and delivery of cross-border letter post items in the destination country. UPU rates are used by many postal operators across the world, both directly and indirectly (as a fall-back provision). In a report from September 2014, Copenhagen Economics identified three types of potential market distortions created by the current UPU terminal dues system. One such distortion was the so-called financial transfers. Following the concept of distortive financial transfers, this report set out to numerically quantify the effects of such distortions.

Using a large data set of postal tariffs and volumes worldwide, we created a model of the financial transfers caused by the terminal dues system. The model compares the regulated terminal dues rates to a counterfactual rate based on domestic postage for each bilateral mail flow worldwide.

The main conclusions of our study are:

The study is commissioned by the US Postal Regulatory Commission

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Related work

U.S. Postal Regulatory Commission Terminal Dues
U.S. Postal Regulatory Commission The Economics of Terminal Dues