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Privatization and Universal Service Obligations

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  • Germà Bel
  • Joan Calzada

Abstract

Telecommunications, airlines, and postal services have similar economic features. However, they have followed different privatization patterns. While privatization of the universal service provider (USP) is common in telecommunications and airlines, it is by far less frequent in the postal sector. This paper analyzes how the size of the universal service obligation (USO) and the mechanisms traditionally used to finance it have prevented privatization in the postal sector. By using a model of a mixed duopoly, we explain that privatization is inversely related to the cost of public funds for USO transfers and to the size of the USP´s reserved area.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 165 (2009)
Issue (Month): 4 (December)
Pages: 650-669

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200912)165:4_650:pauso_2.0.tx_2-v

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Cited by:
  1. Daniel Albalate & Germà Bel & Joan Calzada, 2010. "Urban transport governance reform in Barcelona," IREA Working Papers 201009, University of Barcelona, Research Institute of Applied Economics, revised Jun 2010.

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