th question is big?

Question

If the USPS is seeking a rate increase in part to cover the reduced demand for its services because people are increasingly using online payment systems and other forms of communication, will the rate increase hurt the Postal Service?

Answer 1

It depends.

If we knew perfectly where their supply curve meets their demand curve, as well as the slope of their demand curve, we'd be able to say for sure. The term you're looking for here is "elasticy of demand."

An increase to compensate for loss of demand is most often associated with a regulated monopoly, or at least a monopolistic competition, which is what the USPS has been in the past.

However, it is clear that email and Web pages are taking away a huge part of the mail that went through the system in the past, so if you think about it, they are no longer close to being a monopoly.

Therefore chances are good that the revenue will continue to decrease.

Answer 2

I only use the USPS when I have to use it. You know, when something tangible needs to get somewhere - and it doesn't need to get their quickly. I don't sit and think - hmmmmmm a stamp costs 39 cents and e-mail is free. I use the mail service when it is appropriate and I think that's what most people are doing. So, if they raise their rates, people will still need to get hard copy stuff sent wherever - and they'll pay whatever it is. The post office fills a niche between e-mail and fed-ex (or other speedier services). They don't have a lot of competition for their regular postal services - so i don't think the rate increase will hurt them.

Answer 3

No, it will not.

Some people never will learn about e-mail, and some things you gotta send through the post.

It's not like I'm going to sit at my computer and say, "gee, the rate is higher, I think I will e-mail this instead".

Answer 4

Yes, as less people will be willing to pay the rate.

Answer 5

no