tag:blogger.com,1999:blog-24699713.post2602360851271968289..comments2023-04-15T06:30:45.256-05:00Comments on What I Think: About the Post Office Rate HikeUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-24699713.post-89106386215729382942010-07-21T22:10:35.876-05:002010-07-21T22:10:35.876-05:00Yeah, sometimes I shoot from the hip.Yeah, sometimes I shoot from the hip.Aristoshttps://www.blogger.com/profile/12682742018107902779noreply@blogger.comtag:blogger.com,1999:blog-24699713.post-38183490464752703912010-07-14T19:30:46.061-05:002010-07-14T19:30:46.061-05:00"While every private company in the world und..."While every private company in the world understands that higher prices lead to a decrease in demand, the federal government plans on increasing its prices in order to make up for the loss of demand."<br /><br />While I agree with your sentiment that the Federal Post Office is poorly run (as measured by losses per annum), the above statement isn't quite accurate. The demand for a given good is a function capturing the quantity demanded at each price - as such a change in price is simply a move along the demand curve. An increase in the price of postage simply represents a shift [decrease at any given price] in the supply of letter delivery. At this increased price, the equilibrium quantity will be lower, but the effect on profits is not clear as each sale now results in higher revenue (at it's higher price). In fact, firms with market power intentionally raise prices above competitive levels to maximize profits. <br /><br />Based on the pricing of their competitors, the US Postal Service likely charges too little at present to break even.Anonymoushttps://www.blogger.com/profile/00586649818495939855noreply@blogger.com