The United States Post Office:
a. faces no competition for its mail delivery services
b. has a monopoly in providing first-class mail service
c. can safely ignore the prices for envelope and package delivery services by its rivals such as FedEx and UPS
The correct answer and explanation is :
Correct answer: b. has a monopoly in providing first-class mail service
Explanation:
The United States Postal Service (USPS) is a government-operated agency responsible for providing mail services across the United States. Among its various services, USPS holds a legal monopoly over first-class mail delivery and the use of mailboxes. This means that no other private company is allowed to deliver non-urgent letters or access customer mailboxes in the way the USPS does.
This legal monopoly is established by federal law under the Private Express Statutes. These statutes prohibit private carriers like FedEx and UPS from delivering letters unless they charge at least six times the current USPS first-class rate or meet certain exceptions. The rationale behind this monopoly is to ensure universal service — that is, to guarantee that all Americans, regardless of location, have access to affordable mail services.
However, the USPS does face significant competition in other areas, such as package delivery and express courier services. Companies like FedEx, UPS, Amazon, and DHL compete fiercely in the parcel and logistics markets, where USPS operates services like Priority Mail and Parcel Select. This means USPS cannot “safely ignore” the pricing and service strategies of these private firms, contrary to what choice (c) suggests.
Choice (a) is incorrect because while USPS has a monopoly on first-class mail, it does face competition in other delivery services.
In short, the USPS has a legally protected monopoly only in a specific segment of its services — first-class mail delivery — and is not immune to market forces in other areas. This monopoly exists primarily to uphold its public service obligation, not to eliminate competition across all delivery types. Therefore, option (b) is the most accurate description of USPS’s role and market position.