White Paper: Difficult to Attach Value Pricing to RPNs

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Stamford University economist Frank A. Wolak said it's hard for the U.S. Postal Service to attach value pricing to repositionable notes on mail, according to a new white paper published by the Postal Rate Commission.


In "Pricing Repositionable Notes for Use in Postal Delivery Services," Wolak wrote, "It requires far more information about the demand for postal products and the competitiveness of the market for the goods produced by the downstream industries using these products than the USPS currently has or will obtain from the current RPN market test."


The paper said legal challenges would probably be associated with making value prices for RPN-attached mail permanent.


"There are a number of previous [PRC] decisions and opinions that appear to prohibit or at least severely restrict the use of value pricing," Wolak wrote. "Establishing a permanent value price for RPN-attached mail could make it difficult for the [PRC] to prevent many other forms of price discrimination by the [USPS]."


In its filing with the PRC this month, the postal service said it was finalizing a request for a recommended decision on further testing of a modified RPN service. However, postal officials delayed filing a substantive request so they could review the white paper and incorporate any of its considerations. As a result, the USPS only requested a change in the expiration date of the program.


A full briefing on the white paper will take place Jan. 30 in the PRC hearing room in Washington, DC. It will be broadcast on the PRC's Web site.


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