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Tuesday, 20th February 2007

Rerouting the Mail: Why Canada Post is Due for Reform

Rerouting the Mail: Why Canada Post is Due for Reform (PDF; 128 KB)
Source: C.D. Howe Institute

In this Commentary, we report on the economics of postal reform, and review reforms in other countries. Among our findings: introducing competition with an eye to improving postal performance is an achievable goal, especially if set within a broader economic liberalization program. Reforms in the Netherlands and Germany, for example, produced competitive carriers whose growth and diversification strategies enabled them to become globally competitive postal and communications services companies. In numerous European Union countries, the competitive forces accompanying reform have driven major improvements in on-time or next-day delivery and other measures of service quality. And in New Zealand, where economic liberalization has been most sweeping, the proportion of letters delivered next day increased from 88 percent in 1988 to 97 percent currently.

In our view, extensive reform in Canada is due. Privatizing Canada Post would improve governance of the business, and introducing competition would provide a form of economic discipline that does not at present exist. Maintaining a commitment to universal service in Canada is properly addressed through targeted regulatory or financing schemes, not the blunt and socially costly combination of public ownership and monopoly that currently prevails.


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