carrying the same information in documentary form, or an express delivery provider carrying the same document can be weighed. Since these different platforms in some senses compete against each other, it is important that nothing is done that damages one or the other in the government's regulatory supervision of the sector. In order to ensure the most efficient and effective delivery channel, it is important that the channels are allowed to compete against each other. Economists have described the theory that underpins such competition as the theory of “monopolistic competition.” Under this theory, individual monopolies can compete better against each other and promote overall consumer welfare in an economic sense.

In the virtual world, the meaning of geography is changing. People no longer think of themselves as creatures of a particular physical space. They are as likely to have interests in common with, for example, a Yahoo group member in the US or Europe as in their home town of Tokyo. They may not have much in common with their nearest neighbors in the traditional sense of the word. Increasingly, connectivity is between people, and place is less relevant, just as content and not carriage is king. Another thing that has changed is the speed with which global business is now conducted, powered by the internet. The speed of this change is so fast that the communications channels must be fast also.

All of this has important consequences for telecom and postal companies. The speed of the regulatory system is important. For example, in the US, the current regulatory system which applies to USPS is not tenable, where it takes ten months to approve a postal increase. At this important juncture in the evolution of communication technology, the policy implemented by the state has a substantial impact on the degree of competition in the industry, both at the time of deregulation and in the future.

### 4. The Application of Public Goods Theory to the Postal Sector

The original motivation for a letter mail monopoly was that communications were a vital part of ensuring national identity. The Post satisfied the public goods theory, because consumers that benefited from the service did not deprive others of its benefits or limit supply. Under ordinary public goods theory, there is an incentive for a monopoly to be declared because of the market failure brought about as a result of the fact that we are dealing with public goods. Market failure occurs because the marginal cost curve of these kinds of public goods decreases to zero (instead of being a U-shaped curve as is the case with other goods). This occurs because they generally have very high fixed costs, such as infrastructure and so forth, that means that the average-cost curve declines. This means that as more and more services are provided, costs decline to zero as does price. This prevents the service provider from functioning and hence explains the request for state subvention or in extreme cases, state-mandated monopoly.

However, with the advent of e-mail, the internet, and value-added telecommunications services, the arguments favoring public goods models are less and less persuasive. There is no longer a compelling public interest in ensuring that people have access to postal service because of the many other ways that information is transmitted. Furthermore, even if those arguments held up, there would be no reason not to permit competition, rather competition with regulated rates would be the norm in cases which are supposedly natural monopolies.

Conventional public goods analysis is frequently given as the reason supporting a natural monopoly. In this world, competition is shunned for fear that it will give rise to duplicated