The paper analyzes the impact of different regulatory models on competition and welfare in the Swiss letter market. We conclude that the US system worksharing yields the best results.

Traditionally, pricing of postal services was fully sender based. We analyze a potential alternative consisting of a two-part tariff where the sender is charged reduced postage while the recipient is charged a yearly fixed fee.

The paper analyzes consumer preferences towards a potential two-part tariff in the postal sector. Based on the empirical results we analyze the welfare effects of a two-part tariff when applied in the Swiss letter market.

Based on historical data from 1980 to 2004 the paper analyzes the main drivers of mail demand and the impact of e-substitution by using time-series techniques. We find strong evidence for e-substitution. In the second part of the paper we provide forecasts for future mail volumes.