Estimating technology in the postal sector: a Bayesian approach

ABSTRACT

The aim of this article is to study the technology of the sector represented by the Spanish national post-office and telegraph service, Sociedad Estatal Correos y Telégrafos, S.A. trading as Correos, and denominated as such hereafter. Concretely, we analyse economic efficiency (technical and allocative) and scale economies of the production units (cost centres) of Correos. To do this, we employ a methodology based on an input distance function which is the dual of the cost function. Moreover, and applying duality theory, we develop an economic model to assess the effect of postal infrastructures on the operators’ costs. In order to carry out the empirical model, Bayesian econometrics is applied to estimate the parameters in the input distance function and the technical and allocative efficiency terms.

KEYWORDS:

• Bayesian econometrics
• scale economies
• postal infrastructure shadow price
• Spanish postal sector
• technical and allocative efficiency

JEL CLASSIFICATION:

• C11
• D24
• L32
• L97

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ In this sense, in 2014, the Comisión Nacional de los Mercados y la Competencia has imposed a fine on the postal service provider Correos for abusing its dominant position.For details, see: ec.europa.eu/competition: European Competition Network: ECN, Brief 01/2014.

² The information available has not allowed us its division into different categories.

³ In an attempt to capture the complex postal sector technology as precisely as possible, we have considered a large number of variables (five outputs and two inputs). By doing so, and given we use a Bayesian approach to estimate the model, it is not feasible to test the validity of the Cobb–Douglas over the Translog functional form.

Additional information

Funding

This work was supported by the Spanish Ministry of Economics and Competitiveness [grant number ECO2013-43925-R].