2.3 The U.S. Postal Service (USPS) has a constitutionally guaranteed monopoly on first-class mail. In 2012,it charged
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2.3 The U.S. Postal Service (USPS) has a constitutionally guaranteed monopoly on first-class mail. In 2012,it charged 44¢ for a stamp, which was not the profit-maximizing price—the USPS goal, allegedly, is to break even rather than to turn a profit. Following the postal services in Australia, britain, canada, Switzerland, and Ireland, the USPS allowed Stamps.com to sell a sheet of twenty 44¢ stamps with a photo of your dog, your mommy, or whatever image you want for $18.99 (that’s 94.95¢ per stamp, or a 216% markup). Stamps.com keeps the extra beyond the 44¢ it pays the USPS. What is the firm’s Lerner Index? If Stamps.com is a profit-maximizing monopoly, what elasticity of demand does it face for a customized stamp?
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