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Auctions for Universal Service Subsidies

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  • Sorana, Valter
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    Abstract

    The Telecommunications Act of 1996 requires that telephone service be available in high-cost areas at rates that are "affordable" and "reasonably comparable" to those charged in low-cost areas. It also requires that carriers serving high-cost areas at below-cost rates be compensated with explicit and sufficient subsidies. This paper analyzes an auction mechanism for the allocation of such subsidies. It shows that in a wide range of circumstances auctions are more efficient than traditional subsidy schemes. It also shows, however, that auction designs aimed at stimulating competition among several subsidized carriers may be particularly vulnerable to collusion. Copyright 2000 by Kluwer Academic Publishers

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    Bibliographic Info

    Article provided by Springer in its journal Journal of Regulatory Economics.

    Volume (Year): 18 (2000)
    Issue (Month): 1 (July)
    Pages: 33-58

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    Handle: RePEc:kap:regeco:v:18:y:2000:i:1:p:33-58

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    Web page: http://www.springerlink.com/link.asp?id=100298

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    Cited by:
    1. Gunnar Alexandersson & Staffan Hultén, 2006. "Predatory bidding in competitive tenders: A Swedish case study," European Journal of Law and Economics, Springer, vol. 22(1), pages 73-94, July.
    2. Laura Ilie & Ramiro Losada, 2004. "Endogenous Financing Of The Universal Service," Economics Working Papers we044116, Universidad Carlos III, Departamento de Economía.
    3. Jehiel, Philippe & Moldovanu, Benny, 2006. "Allocative and Informational Externalities in Auctions and Related Mechanisms," CEPR Discussion Papers 5558, C.E.P.R. Discussion Papers.
    4. Birke, Franziska, 2007. "Universaldienstregulierung in der Telekommunikation heute: Herausforderungen, Chancen und Risiken ; ein historischer Ansatz," Discussion Papers 114, University of Freiburg, Institute for Transport Economics and Regional Policy.
    5. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
    6. Joan Calzada & Xavier Fageda, 2012. "Discounts and Public Service Obligations in the Airline Market: Lessons from Spain," Review of Industrial Organization, Springer, vol. 40(4), pages 291-312, June.

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