Hedging against postage rate increases
Landry, Steven P.
MetadataShow full item record
Canada Post issued the first permanent stamp on 16th November, 2006. The United States Postal Service soon followed by introducing the forever stamp on 12th April, 2007. The stamps were developed to ease the transition associated with increases in postal rates. The stamp price equals the one-ounce cost of first-class postage at the time of purchase. The stamp allows consumers to receive services equal to the value of a first-class postage stamp at the time of use. Permanent stamps are unique given their insensitivity to postal rate increases, thereby offering the potential to hedge against future postage rate increases. Moreover, postal services commonly pre-announce rate changes providing a several week notice before the change takes effect. The careful treasury manager conceivably can minimise mailing costs around postal increases by strategically purchasing permanent and forever stamps. Indeed, the enterprising entrepreneur might make a market by purchasing stamps prior to the rate change and selling them after for the new going rate. In this paper the authors develop a model to determine optimal stamp purchases around postal rate increases. The results indicate it is optimal for most individuals to purchase between a 90- and 730-day supply of permanent postage when a $0.01 increase in postage rates is imminent. From a policy perspective, the results imply that postal authorities should monitor permanent stamp purchase patterns to determine the optimal timing and magnitude of postal rate increases.
RightsThis publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.
Showing items related by title, author, creator and subject.
Performance-based design for arson threats: policy analysis of the physical security for federal facilities standard Neale, Robert A. (Monterey California. Naval Postgraduate School, 2013-09);Although perhaps not so dramatic or newsworthy as chemical, biologic, radiologic, nuclear, or explosive attacks, intentionally set fires are identified security threats to federal buildings accessible to the public. The ...
A High-Value-Best-Value approach to public shipyard human capital management to improve ship availability Buckley, Shannon R. (Monterey, California: Naval Postgraduate School, 2015-09);One of the problems faced by public shipyards is delays in completing maintenance, upgrades, and overhauls on ships. The general trend is for ships to be delivered behind schedule, which impacts the U.S. Naval Fleet’s ...
Apte, Uday; Ahn, Seongje; Guignard-Spielberg, Monique (2011);In this paper we examine the check sorting and clearing operation and develop a mathematical model for arriving at optimal decisions on check sorting patterns and clearing routes. Previous research in this area has focused on ...