Demand models for direct mail and periodicals delivery services: results for a transition economy

Abstract

This paper examines the demand for services of the Slovenian national postal operator for the direct mail and periodicals market and separately for the direct mail market. The main factors of the demand are found to be various price indicators with respect to individual market, two income series and the variable of economic environment. The results of our empirical analysis suggest that the price elasticity of demand on both markets is below zero. The autonomy in price increases is limited due to positive cross-price elasticity of demand for direct mail with regard to price fluctuations for TV commercials. Substitution effects on the direct mail market are even more evident with regard to price fluctuations for advertisements in magazines and daily papers. An additional finding is that the demand on both markets varies seasonally in all models estimated by us. Finally, coefficients of income elasticity of demand for direct mail services show that the total number of mail deliveries on the direct mail market increases faster than the retail revenue in real terms.