Gradual Network Expansion And Universal Service Obligations
AbstractUniversal service obligations are usually not competitively neutral as they modify the way firms compete in the market. In this paper, we consider a continuum of local markets in a dynamic setting with a stochastically growing demand. The incumbent must serve all markets (ubiquity) possibly at a uniform price and an entrant decides on its market coverage before firms compete in prices. Connecting a market involves a sunk cost. We show that the imposition of a uniform price constraint modifies the timing of entry: for low connection cost markets, entry occurs earlier while for high connection cost markets, entry occurs later.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Annals of Public and Cooperative Economics.
Volume (Year): 82 (2011)
Issue (Month): 2 (06)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1370-4788
Other versions of this item:
- Axel Gautier & Keizo Mizuno, 2011. "Gradual Network Expansion and Universal Service Obligations," CREPP Working Papers 1105, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
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- De Villemeur Etienne Billette & Cremer Helmuth & Boldron Francois & Roy Bernard, 2008. "Worksharing: A Calibrated Model," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-22, June.
- repec:rne:rneart:v:7:y:2008:i:2:p:272-293 is not listed on IDEAS
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