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Competitively neutral universal service obligations

Author

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  • GAUTIER, Axel

    (CREPP, HEC-Université de Liège, B-4000 Liège, Belgium; Université catholique de Louvain, CORE, B-1348 Louvain- la-Neuve, Belgium)

  • WAUTHY, Xavier

    (CREPP, HEC-Université de Liège, B-4000 Liège, Belgium; Université catholique de Louvain, CORE, B-1348 Louvain- la-Neuve, Belgium)

Abstract

Universal service obligations impose specific costs on the universal service provider. The measure of these costs and their financing have been studied along two complementary lines of reasoning: is the universal service obligation sustainable? Who should bear its costs? Most often, a two-step procedure is put forward. In a first step the cost of USO must be assessed; in a second step the USP must be compensated for this cost. In this paper we argue that this procedure is most often problematic because the implementation of the compensation scheme directly affects the effective cost of USO. We therefore put forward an alternative approach to this problem which does not rely on this two-step procedure and fully acknowledges the distortions that result from the compensation mechanism.

Suggested Citation

  • GAUTIER, Axel & WAUTHY, Xavier, 2010. "Competitively neutral universal service obligations," LIDAM Discussion Papers CORE 2010061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2010061
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    Cited by:

    1. Poudou, Jean-Christophe & Roland, Michel, 2014. "Efficiency of uniform pricing in universal service obligations," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 141-152.
    2. Srinuan, Chalita, 2014. "Uncertainty of public pay phone in Thailand: Implications for the universal service obligation," Telecommunications Policy, Elsevier, vol. 38(8), pages 730-740.
    3. Gautier Axel & Paolini Dimitri, 2011. "Universal Service Financing in Competitive Postal Markets: One Size Does Not Fit All," Review of Network Economics, De Gruyter, vol. 10(3), pages 1-30, September.
    4. Poudou, Jean-Christophe & Roland, Michel, 2017. "Equity justifications for universal service obligations," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 63-95.
    5. Gautier Axel & Poudou Jean-Christophe, 2014. "Reforming the Postal Universal Service," Review of Network Economics, De Gruyter, vol. 13(4), pages 453-477, December.

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    More about this item

    Keywords

    universal service obligations; cost-sharing mechanism; competitive neutrality;
    All these keywords.

    JEL classification:

    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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