The efficiency of postal services in the age of market liberalization and the internet: Evidence from Central and Eastern Europe

•We examine the productive efficiency of postal operators in East Europe.•We use nonparametric models with quantitative and qualitative outputs.•Inefficiency of postal services is between 20 and 30%.•Increased competition and institutional reforms result in efficiency gains.•Growing number of internet users has a negative effect on postal efficiency.

The rise in electronic communications and the recent liberalization of the postal market in the European Union have put national postal-service providers in Central and Eastern Europe (CEE) under pressure to restructure and optimize their operations. The paper employs non-parametric methods to measure the relative technical and cost efficiency of CEE postal operators in terms of quantity-based and quality-based output indicators. The results indicate that inefficiency varies between 20% and 30%. Regression analysis attributes efficiency gains to increased competition, institutional reforms, less burdensome customs procedures, and population density, while use of electronic mail was negatively related to postal-service efficiency.