A lot of people are directing to the liberalism or deregulation strategy which the past Governor Pete Wilson employed into regulation in 1996. The policy was intended to expose the country's electricity business to the rivalry. In that time, Wilson and some participants the government observed the electricity business as a captivating domination benefit of customers. Ultimately, around 40% of installed capability (20 gigawatts) was traded to "independent power producers." The practicalities were then required to purchase their electricity from the freshly formed “day-ahead” only marketplace, the California Power Exchange (PX). Services were prohibited from incoming into long-term contracts which will have permitted them to border their energy consumptions and moderate each day’s strikes in costs because of temporary supply interruptions and demand points as of hot weather conditions. At the time liberalism happened in the year of 1996, California's main services traded numerous of their power plants to a minority of power traders. The complex at this time is that liberalism has given power providers slight enticement to upsurge their volume to reach the country's increasing request for electricity. Governor Davis is in the middle of the critics who are proposing that these traders have even suspended source from scoring electricity costs, a privilege that the traders have strongly disagreed (Howle, 2010).

1.      What external or uncontrollable factors aggravated the situation? [10 points]

Uncontrollable factors that aggravated the situation are (Weare, 2003):

·         A lack of producing capability

·         Blockages in associated marketplaces

·         Comprehensive generator marketplace control

·         Governing mistakes

·         Defective marketplace strategy

2.      Comment on the quote by Carl Wood of the Public Utilities Commission: ‘I’m not an economist, so I’m flying by the seat of my pants, but it seems to me that it is orthodox economics that got us into this mess in the first place.’ [10 points]

The quote mentioned above from Carl Wood describes the reality which happened and caused on the electricity issue in California back in 1996 which caused by the orthodox or in simple words; it was the authoritative economist that first created a mess and could be blamed as the trouble makers in this case. Along with their authority, they have created a big mess and the economic crisis at that time.

3.      How can California’s problems be fixed? [10 points]

The appropriate solution to fix California’s problem would depend on the politicians who have created the problems since the first time. The suggestions from a group of energy and community procedure specialists assembled over the University of California, Berkeley also should be reviewed (Künneke, et al., 2005). This group delineating several public procedures resolves intended to support California resolve the energy issues which named with “Manifesto on the California Electricity Crisis,” which underlining four main fundamentals to the results such as:

1.      Independence to involve in long-term agreements

2.      Selling cost elasticity

3.      Opposition at both the comprehensive and trade stages

4.      Extra active collaboration among federal and national officials to answer a variability of marketplace inadequacies and ensuing marketplace presentation difficulties

Case Study 12.2: Postal Service

Questions

1.      In what ways has the European Commission been cautious in liberalizing the market in postal services? Why? [15 points]

The European Commission has been silently enrolling the reviewed instruction which would be resolute the following stage of marketplace opening in the year of 2003. The perception of open marketplace amazes people divisions like Britain’s Post Office and La Poste of France. They claimed that these divisions need to be sheltered to make sure that they can accomplish an important public responsibility which is assuring consumers worldwide standard of the facility at a particular charge, notwithstanding of wherever they live (Geradin, 2002).

2.      What are the substitutes or competitors that are involved in this market? [10 points]

The competitors that are involved mentioned as private companies such as DHL and UPS which focused on the packages and rapid zones in the marketplace (Crew & Kleindorfer, 2012).

3.      What is the relevance of the USO to the issue of liberalizing the market? [10 points]

The main explanation for the presence of a quiet part in the postal segment is to deliver postal managements with a definition of subsidy the price of the Universal Service Obligation (USO). This directly rises as crucial matters the meaning of the USO itself and the dimension of the associated USO charge. Neither of these queries has direct responses, but then, in the European Union, their prominence from a rule perception has increased significantly due to the rising motivation to the liberalization of postal marketplaces (Sabathil, et al., 2008).

4.      What, if anything, can be learned from the experience of the USA in the postal services market? [15 points]

The U.S. Post Office is the picture for what went mistaken once a business entirely concentrates on productivity.  Extra, superior, quicker, low-priced is not adequate to strive.  Presence operationally well-organized, even cheap, is not adequate to thrive in rapid ever-changing marketplaces where consumers keep on moving and altering requirements.  Leadership must able to identify marketplace moves promptly and spend in new development occasions permitting the business to persist feasible in modifying marketplaces (Crew & Kleindorfer, 2011).

5.      Why have the activities of Deutsche Post been controversial? [10 points]

Deutsche Post activities claimed to be controversial due to it has made procurements in entirely the central Europe marketplaces and in entirely the large postal segments such as parcels, express mails, and logistics along with letters. The company even has consumed 5.8 billion euro on procurements which 5 billion euro of that throughout the year of 1999. Deutsche Post has also been spending in e-commerce. Its worldwide motivations were obvious from its economic outcomes for 1999. Deutsche Post is the focus of some authorized disagreement consequence in which it resolute whether it is able to be drifted of any kind (Wilkinson, 2005).