The US Postal Service is facing increased competition from f

The U.S. Postal Service is facing increased competition from firms providing overnight delivery of packages and letters. Additional competition has emails, fax machines, and text messaging. What will be the effect of this competition on the market demand for mail delivered by the post office?

Solution

ANSWER:

With the increased competition from firms providing overnight delivery of packages and letters the market has shifted, however USPS operation still confers large gains including exclusive rights to leave letters and to deliver letter mail and packages in residential mailboxes and the central mailrooms of office buildings and apartment houses. As USPS’s monopoly and competitive operations are using many facilities, equipment and labor, USPS has been able to leverage its monopoly privileges to support its private sector. Due to these reasons it USPC still exists. The USPS cost is competitive or economical than other providers, the tracking service works efficient, and like others USPS will pick up at your door for free. Moreover the U.S. Postal Service market dominant products are price inelastic.