Saturday, May 12, 2007

Mother's Day Price Hike

This Monday, the day after Mother's Day, the postal service will be hiking the price of a stamp to forty-one cents (from thirty-nine). A lot people probably don't care--e-mail and cell phones are a much cheaper and convenient way to communicate, but some will, especially those that sell bulk mail.

People tell me that even though there's a monopoly on postage, the price isn't too high. I'm constantly confused how anyone could know that. While most communication is a fine substitute for using the post office, bills, greeting cards, and other communiques are don't work that way (for most people). Most importantly, no one is allowed to offer an alternative to something close enough to what people demand. There's a very important part of the market where there's only one producer-how do we know if we're getting a good deal?

Competition works because it allows people to shop and compare, offering a check for those who try to price too high. If you were only legally allowed to buy cards from one store, you'd probably think you were being ripped off. Same goes for here.

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