Postal Service As a Monopoly
Postal Service As a MonopolyIn the United States economy most markets can be classified into four
different markets structures. But, each and every market in the United
States is completely unique from the others. Generally the best type of
market structure for the general public is per-fect competition because
it creates the lowest possible price for the public. There are some
exceptions were perfect competition isn’t the best choice for the public
on account of various reasons. The United States Postal Service is one
of them and since the Postal Service is a monopoly, it is its own
market. This paper will discuss the budget dilemmas that the postal
service has faced for the past twenty years and if it is in the best
interest of the economy for the United States Postal Service to continue
as a monopoly.
The first time there was talk of privatizing the Postal Service was
in1979 when the Postal Service was losing vast amounts of money in the
long run. But since the Postal Service is a necessity for America, the
government had to subsidize the service in order for it to continue in
operation. In 1979 the United States Postal Service had a cash flow of
$22.5 Billion and was additionally receiving $176 million from
investing(#1, Intro). Even with this added revenue the Postal Service
was still greatly under funded on its own (#1, Intro). During this time
it was discussed to privatize the postal service and introduce
competition because of the extreme losses that the service was
experiencing. A positive argument for privatizing the Postal Service
was with numerous competitors in the market there would be more
efficiency and the public would receive lower prices. But this would
also increase the usage of resources, for example airplanes and cars.
One of the problems the Post Office had was its receipts from consumer
purchases that were submitted the next day after the transaction (#1,
i). If the receipts were submitted earlier the postal service would
receive more money because they could invest that money sooner (#1, i).
Another way the Postal Service could increased profits was by
competitively selecting banks that would give them higher interest rates
and such (#1, ii). Probably the most relevant and final way to improve
the budget of the Postal Service is to improve the bookkeeping poli-cies
and banking techniques (#1, ii).
Not only did the Post Service propose to increase profits but they also
proposed to cut costs in a number of ways. There were three methods
that were proposed in 1946 for the protection of salaries that no longer
exists (#2, Intro). These have to do with the rural mail carriers.
Under this antiquated method of delivering mail the Postal Service was
los-ing money...
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