Tuesday, December 6, 2011

Blame the USPS?

How important is the economic inefficiency and, why not, income inequality (think about e-commerce millionaires) created by the price subsidizing and cross-subsidizing of long-distance online commerce implicit in the artificially low USPS mailing fees structure found in the US?

Buying and selling decisions in Europe are more affected by distance, resulting in a lower amount of wasteful individual item packaging and long-distance routing. European fees structures also favor local brick & mortar retailers. In the US, consumers buy an excessive amount of small-value items through e-commerce because the cost of shipping them individually across long distances is too low. Without this price subsidy, consumers would resort more frequently to local retailers, which should be able to sell for less due to bulk shipping, handling and packaging.

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