Stamps

Things have been a little quiet on here of late, although many interesting things have been happening for the keen economist in recent weeks and months, not least the recent panic buying of stamps (alongside petrol), prompted by an announcement that Royal Mail will increase the price of stamps by 30%. Sloman's economics blog comments on this here, and notes the public outrage at the price moves, with the word "profiteering" appearing at least once.

It's quite odd how a loss-making business can be accused of profiteering, but that's another matter.

The bottom line is that there exist other ways of sending information, and perhaps there have never been as many as there are now, and not surprisingly Royal Mail has felt the pinch. The optician concerned about the cost of sending out thousands of mail shots ought to perhaps consider alternative means of getting that information out - emails, phone calls, or even just other mail companies other than Royal Mail.

The reason the stamp price hike seems to great is that before now Royal Mail haven't been able to, because of the regulator restricting how much they can increase prices by. While it might be argued that by keeping the price low, Royal Mail gets more customers, it is clearly the case that folk are not influenced by price alone when decided how to send information - if they were, then Royal Mail wouldn't have been making losses with such apparently attractive prices.

Royal Mail needs the flexibility of not having so many of the things it can do so heavily regulated if it is to adapt and survive in an age of rapidly advancing technology.