networks and less rather than greater efficiency. In this context, it is important to note that legislated monopolies were created before the development of public goods theories. In other words, much of the economics to justify natural monopoly theory occurred well after the political forces that gave rise to natural monopoly. The reality is that natural monopoly theories never did hold much weight. Viewing the competitive process as a dynamic one, we can see that few industries could say that the free market, applying a natural monopoly would allow consolidation to monopoly without the potential for new entrants or future competition acting as a restraint. Even if there are still adherents to the concept of natural monopoly, the number of industries that do not now have substantial infrastructural bypass capabilities is small and declining. One can look at the impact of wireless technology on the wired market and the arguments for natural monopoly there that were based on the high fixed costs of building the network. In the case of postal, this is even further removed from the realm of natural monopoly because of the ways that competing methods of getting information to people do not rely on or in any sense interconnect with the Post's network.

A major issue is the notion of whether in a dynamic competitive environment, there is such a thing as excessive competition. “Ruinous” or “excessive” competition frequently harms high cost producers and benefits consumers. Consumers are harmed only if the low cost producers are actually producing below cost, and hence setting up the conditions for monopoly later. The whole concept of public goods theory rests on the presumption that in certain cases monopoly is the preferred market condition, because competition would invariably be excessive and lead to duplication. However, there is no reason in a public goods context why free competition as opposed to a legislatively granted monopoly might not lead to a large provider, and there is no inconsistency with normal competitive conditions that this should occur. It certainly does not mean that certain industries are prone to natural monopoly, or that the market fails in certain cases.

In most network industries that had previously been thought to be natural monopolies, such as the electric utilities industry, competition has been an important element in keeping downward pressure on price.

While the notion of natural monopoly in general has broken down, postal services are the least likely entities to qualify for such treatment even if the notion were accepted. In electricity, telecom or gas facilities, one can see the very high fixed-capital costs of building out complex wire or pipe networks. We do not see such high fixed costs for postal services. Because these fixed costs are not so high, the risk of future entry by other businesses would be high in a freely competitive scenario. This fact means that if the Post were privatized, then any tendency towards monopoly would be restrained by the possibility of future entry, thus obviating the need for excessive price controls.

The need for a state-granted monopoly in the postal sector is further reduced by the “vertical separability” of regular postal services. The main functions of postal services are pick up, various sorting procedures, and delivery. Data suggests that less time-sensitive delivery services, such as regular postal service, should tend to be less vertically integrated across these functions, because the transaction costs involved in contracting between them are relatively low. In express delivery, by contrast, the transactions costs involved in contracting for highly specific assets and services needed to accomplish reliable express delivery are relatively high, and generally preclude