Postal Service As A Monopoly Essay

1174 words - 5 pages

- -Postal Service As a MonopolyIn the United States economy most markets can be classified into fourdifferent markets structures. But, each and every market in the UnitedStates is completely unique from the others. Generally the best type ofmarket structure for the general public is per-fect competition becauseit creates the lowest possible price for the public. There are someexceptions were perfect competition isn't the best choice for the publicon account of various reasons. The United States Postal Service is oneof them and since the Postal Service is a monopoly, it is its ownmarket. This paper will discuss the budget dilemmas that the postalservice has faced for the past twenty years and if it is in the bestinterest of the economy for the United States Postal Service to continueas a monopoly.The first time there was talk of privatizing the Postal Service wasin1979 when the Postal Service was losing vast amounts of money in thelong run. But since the Postal Service is a necessity for America, thegovernment had to subsidize the service in order for it to continue inoperation. In 1979 the United States Postal Service had a cash flow of$22.5 Billion and was additionally receiving $176 million frominvesting(#1, Intro). Even with this added revenue the Postal Servicewas still greatly under funded on its own (#1, Intro). During this timeit was discussed to privatize the postal service and introducecompetition because of the extreme losses that the service wasexperiencing. A positive argument for privatizing the Postal Servicewas with numerous competitors in the market there would be moreefficiency and the public would receive lower prices. But this wouldalso increase the usage of resources, for example airplanes and cars.One of the problems the Post Office had was its receipts from consumerpurchases that were submitted the next day after the transaction (#1,i). If the receipts were submitted earlier the postal service wouldreceive more money because they could invest that money sooner (#1, i).Another way the Postal Service could increased profits was bycompetitively selecting banks that would give them higher interest ratesand such (#1, ii). Probably the most relevant and final way to improvethe budget of the Postal Service is to improve the bookkeeping poli-ciesand banking techniques (#1, ii).Not only did the Post Service propose to increase profits but they alsoproposed to cut costs in a number of ways. There were three methodsthat were proposed in 1946 for the protection of salaries that no longerexists (#2, Intro). These have to do with the rural mail carriers.Under this antiquated method of delivering mail the Postal Service waslos-ing money to any mail that went to 'rural' areas (#2, i) There are48,000 mail carriers that deliver mail to millions of families that areconsidered to be living in rural settings; this costs the postal Service858 million dollars a year (#2, i). This is a fairly easy problem tofix considering how much money is being...

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