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Inefficient markets

Faced with social obligations on one side and increased competition on the other, Royal Mail is in trouble. But the government is leaving the hard decisions to Postcomm

By Michael Prest   July 2007

Lost in the post

Few major businesses in Britain can be as beleaguered as Royal Mail. Grappling with a declining market, increasing competition, tight regulation and a sole shareholder in the shape of the government, one of the country’s most recognised brands now faces possible strike action by the Communication Workers Union.

Beyond these quotidian travails, however, lies a larger strategic issue: how do you liberalise the postal market while retaining Royal Mail in public ownership? In most other major privatisations, like telecommunications, the state monopoly was privatised first and the market gradually liberalised afterwards. But the postal market…

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