Class 17 Network Industries, Spring, 2014 The Post Office 11/30/2018 Class 17 Network Industries, Spring, 2014 The Post Office Randal C. Picker James Parker Hall Distinguished Service Professor of Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu Copyright © 2000-14 Randal C. Picker. All Rights Reserved.

U.S. Post Office Testimony (Mar 13, 2014) November 30, 2018 U.S. Post Office Testimony (Mar 13, 2014)

U.S. Post Office Testimony (Mar 13, 2014) November 30, 2018 U.S. Post Office Testimony (Mar 13, 2014)

November 30, 2018 GAO Report (July 2013)

U.S. Post Office Testimony (Mar 13, 2014) November 30, 2018 U.S. Post Office Testimony (Mar 13, 2014)

11/30/2018 Source: http://about.usps.com/who-we-are/postal-history/first-class-mail-since-1926.pdf First-Class Mail Volume, Historian, United States Postal Service, Feb 2014 November 30, 2018

Communications Economics 11/30/2018 Communications Economics Hypo A wants to send B a message A values having B receive the message at $2; B values receiving the message at an additional $2 Social cost to transmit message is $3 Who should pay? A? B? Both? November 30, 2018

Key Point Communications Externalities 11/30/2018 Key Point Communications Externalities Both A and B may benefit from the message If A or B bears the full cost of the message, may have too few messages sent November 30, 2018

Key Point Simple Example 11/30/2018 Key Point Simple Example If we charge sender or recipient full-cost of message, if they can’t compensate each other, message won’t be sent even though doing so increases welfare November 30, 2018

Moving this to the Real World 11/30/2018 Moving this to the Real World Issues Symmetric benefits To what extent do we think sending and receiving are symmetric? Personal letters? Advertisements by businesses? November 30, 2018

Moving this to the Real World 11/30/2018 Moving this to the Real World Counting Costs How much more expensive is it to charge both senders and receivers as compared to just charging one or the other? November 30, 2018

Literature See (but hard) 11/30/2018 Literature See (but hard) Hermalin & Katz, Sender or receiver: who should pay to exchange an electronic message, 35 Rand J Econ 423 (2004) Loder, Van Alstyne & Wash, An Economic Response to Unsolicited Communication, 6 Adv Econ Analysis & Policy 2 (2006) November 30, 2018

U.S. Constitution Art. I, Sec 8: 11/30/2018 U.S. Constitution Art. I, Sec 8: The Congress shall have Power … To establish Post Offices and post Roads November 30, 2018

Post Office Act of 1789 (1 Stat 70) November 30, 2018 Post Office Act of 1789 (1 Stat 70)

11/30/2018 November 30, 2018 H. Rep. Report 477 (May 15, 1844)

H. Rep.: Cross-Subsidization November 30, 2018 H. Rep.: Cross-Subsidization

H. Rep.: Competitive Provision of Mail November 30, 2018

H. Rep.: Gov’t losses and Competitive Provision of Mail November 30, 2018

H. Rep.: Gov’t monopoly required November 30, 2018 H. Rep.: Gov’t monopoly required

H. Rep.: Gov’t monopoly required November 30, 2018 H. Rep.: Gov’t monopoly required

Post Office Act of Mar 3, 1845: Sec 9: Gov’t Monopoly November 30, 2018

Post Office Act of Mar 3, 1845: Sec 10: Gov’t Monopoly: Can’t use mail routes for other purposes November 30, 2018

Post Office Act of Mar 3, 1845: Sec 1: General Pricing November 30, 2018

Historian, U.S. Postal Service, Aug, 2008 11/30/2018 Source: http://about.usps.com/who-we-are/postal-history/domestic-letter-rates-1792-1863.pdf November 30, 2018 Historian, U.S. Postal Service, Aug, 2008

Historian, U.S. Postal Service, Aug, 2008 11/30/2018 Source: http://about.usps.com/who-we-are/postal-history/domestic-letter-rates-1792-1863.pdf November 30, 2018 Historian, U.S. Postal Service, Aug, 2008

H. Rep.: Prices and Elasticities November 30, 2018 H. Rep.: Prices and Elasticities

Post Office Act of Mar 3, 1845: Sec 1: Franking November 30, 2018

Post Office Act of Mar 3, 1845: Sec 2: Newspaper Pricing November 30, 2018

Post Office Act of Mar 3, 1825: Sec 30: Newspaper Pricing November 30, 2018

Post Office Act of Mar 3, 1845: Sec 3: Magazine Pricing November 30, 2018

Post Office Act of Mar 3, 1845: Sec 3: Letter mail fast lanes? November 30, 2018

Strong Non-Neutralities 11/30/2018 Strong Non-Neutralities Neutral Pricing Key to distance and weight Not type of content November 30, 2018

Strong Non-Neutralities 11/30/2018 Strong Non-Neutralities 1845 Act Newspapers completely free if within size and distance limit Magazines have lower rates compared to letters for same weights; rates independent of distance November 30, 2018

Strong Non-Neutralities 11/30/2018 Strong Non-Neutralities Discrimination in Quality of Service Sec 4 contemplates different levels of quality of service of newspapers and magazines relative to regular letter service November 30, 2018

Post Office Act of Mar 3, 1845: Sec 22: Paying for it November 30, 2018

Post Office Act of Mar 3, 1863: Sec 11: Creation of Local Delivery November 30, 2018

Post Office Act of Mar 3, 1863: Sec 12: Creation of Local Delivery November 30, 2018

Bundling and Unbundling Mail Delivery 11/30/2018 Bundling and Unbundling Mail Delivery General Delivery v. Location (Home) Delivery Move to “free” service effectively bundles local and long distance mail delivery Before long distance done by post office (esp. given statutory monopoly (see Sec 9 of 1845 Act)), but could have local competition Move to free should kill off local delivery services November 30, 2018

Post Office Act of Mar 3, 1863: Secs 21 & 22: Postage Stamp Pricing (Distance Dropped) November 30, 2018

November 30, 2018 Pricing: 1863 Forward

U.S Post Office Annual Report 1914 November 30, 2018 U.S Post Office Annual Report 1914

U.S Post Office Annual Report 1914 November 30, 2018 U.S Post Office Annual Report 1914

Obstruction of Correspondence 11/30/2018 Obstruction of Correspondence 18 USC 1702 Whoever takes any letter, postal card, or package out of any post office or any authorized depository for mail matter, or from any letter or mail carrier, or which has been in any post office or authorized depository, or in the custody of any letter or mail carrier, before it has been delivered to the person November 30, 2018

Obstruction of Correspondence 11/30/2018 Obstruction of Correspondence 18 USC 1702 to whom it was directed, with design to obstruct the correspondence, or to pry into the business or secrets of another, or opens, secretes, embezzles, or destroys the same, shall be fined under this title or imprisoned not more than five years, or both. November 30, 2018

Destruction of letter boxes or mail 11/30/2018 Destruction of letter boxes or mail 18 USC 1705 Whoever willfully or maliciously injures, tears down or destroys any letter box or other receptacle intended or used for the receipt or delivery of mail on any mail route, or breaks open the same or willfully or maliciously injures, defaces or destroys any mail deposited therein, shall be fined under this title or imprisoned not more than three years, or both. November 30, 2018

Letters and writings as nonmailable 11/30/2018 Letters and writings as nonmailable 18 USC 1717(a) Every letter, writing, circular, postal card, picture, print, engraving, photograph, newspaper, pamphlet, book, or other publication, matter or thing, in violation of sections 499, 506, 793, 794, 915, 954, 956, 957, 960, 964, 1017, 1542, 1543, 1544 or 2388 of this title or which contains any November 30, 2018

Letters and writings as nonmailable 11/30/2018 Letters and writings as nonmailable 18 USC 1717(a) matter advocating or urging treason, insurrection, or forcible resistance to any law of the United States is nonmailable and shall not be conveyed in the mails or delivered from any post office or by any letter carrier. November 30, 2018

Letters and writings as nonmailable 11/30/2018 Letters and writings as nonmailable 18 USC 1717(b) Whoever uses or attempts to use the mails or Postal Service for the transmission of any matter declared by this section to be nonmailable, shall be fined under this title or imprisoned not more than ten years or both. November 30, 2018

Postage unpaid on deposited mail matter 11/30/2018 Postage unpaid on deposited mail matter 18 USC 1725 Whoever knowingly and willfully deposits any mailable matter such as statements of accounts, circulars, sale bills, or other like matter, on which no postage has been paid, in any letter box established, approved, or accepted by the Postal Service for the receipt or delivery of mail matter on November 30, 2018

Postage unpaid on deposited mail matter 11/30/2018 Postage unpaid on deposited mail matter 18 USC 1725 any mail route with intent to avoid payment of lawful postage thereon, shall for each such offense be fined under this title. November 30, 2018

November 30, 2018 H. Rep No. 73-709 (Feb 13, 1934)

Managing the Mail Box Hypo 11/30/2018 Managing the Mail Box Hypo I have a driveway leading up to my house At the end of the driveway, on my land, I install a mailbox purchased by me for the delivery of mail Who owns the mailbox? Me? The U.S. government? November 30, 2018

Managing the Mail Box Suppose I attach a sign to the mailbox 11/30/2018 Managing the Mail Box Suppose I attach a sign to the mailbox “Intended for delivery of official US mail; also available for use for anyone wishing to drop off material to this house” November 30, 2018

Managing the Mail Box Questions Consistent with ownership rule? 11/30/2018 Managing the Mail Box Questions Consistent with ownership rule? Is a contrary rule consistent with First Amendment? What do we learn from Greenburgh Civic Associations, 453 US 114 (1981)? November 30, 2018