Alright, RaftPeople, you’ve put together a well-sourced and solid argument that business units can subsidize each other.
My one question is… do customers subsidize one another?
I thought we were talking about users of one fixed price product subsidizing other users of that same fixed price product. Which can’t be cross-subsidization.
Here are the various angles:
1 - The dollars provided by one group of customer’s can be used by the business to subsidize a different group of customers
2 - The business is the entity that sets up the subsidization structure and mechanism (the customers do not)
3 - The customer’s activity is required to realize or instantiate the subsidization when the source is revenue
From the perspective of #2, the answer is absolutely no - the business created the mechanism, not the customer
From the perspective of #3, the answer is absolutely yes - the act of purchasing is what instantiates the subsidization
The answer to your question depends on the assumptions being made, both #2 and #3 are correct.
The pricing is what creates the subsidization.
If FedEx charged the same price for zone 1 deliveries as they do for zones 2 through 8, then you have this same situation.
Just because USPS already did that, doesn’t mean the situation doesn’t exist.
Is this a purely intellectual discussion or is someone seriously suggesting that postage prices (particularly for letters) vary according to location?
They do for UPS and FedEx.
They don’t for USPS.
This led to a poster making the point that for USPS, lower cost transactions are subsidizing higher cost transactions.
Which led to my noting upthread that “The Postal Service is legally obligated to serve all Americans, regardless of geography, at uniform price and quality.” USPS is a public service for “all Americans”. Commercial deliverers serve their shareholders.
No disagreement with any of that. The discussion wasn’t so much about why they practice subsidization, it was more about whether their pricing could be considered subsidization between low cost transactions and high cost transactions.
Why does it cost less to mail from China to the USA than to mail from the USA to China?
for one thing that’s a treaty they both signed. And there is way more mail coming to the US then going to China.
Yes, people buy something from China with a very small shipping charge. If they need to return it, the charge is much higher.
nm
I don’t know why that is.