This Ain't How It's Supposed to be Done
26 February 2007
News Editor, WTOP Radio
Dear Editor:
You report that the U.S. Postal Service wants to raise the price of a first-class stamp by three cents. The USPS's stated reason, as you note, is that people increasingly use e-mail and the Internet to do things once done through the mail. So because the USPS is losing customers, it wants to raise its prices.
This perverse argument is the best case for opening first-class mail delivery to competition. In competitive markets, firms that are losing customers CUT their prices. The fact that the USPS brass can think only to raise prices in response to a loss of market share speaks volumes about the need to subject that institution to the bracing winds of competition.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
News Editor, WTOP Radio
Dear Editor:
You report that the U.S. Postal Service wants to raise the price of a first-class stamp by three cents. The USPS's stated reason, as you note, is that people increasingly use e-mail and the Internet to do things once done through the mail. So because the USPS is losing customers, it wants to raise its prices.
This perverse argument is the best case for opening first-class mail delivery to competition. In competitive markets, firms that are losing customers CUT their prices. The fact that the USPS brass can think only to raise prices in response to a loss of market share speaks volumes about the need to subject that institution to the bracing winds of competition.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Saturday October 27, 2007 at 11:27am