Electronic Substitution in the Household - Level Demand for Postal Delivery Services

This paper quantifies the shift in the household-level demand for postal delivery services over time and determines the extent to which it can be attributed to the appearance of alternative modes of communication versus the concomitant rise in the relative price of postal delivery services. The two major results to emerge from this analysis are: (1) postal price increases of the magnitude recently enacted on January 1, 1995 should lead to significant reductions in aggregate householdlevel expenditures on postal delivery services, and (2) annual increases in the pervasiveness of personal computer technology in the household at historical rates leads to reductions in aggregate household-level expenditures on postal delivery services that are at least as large as those that would result from a postal price increase on the order of 10 percent.