Should Uniform Pricing Constraints be Imposed on Entrants?
AbstractWe analyse the effects of universal service obligations, such as uniform pricing, price caps and unbundling, on allocations in markets newly opened to competition, e.g. telecommunications. If uniform pricing is imposed not only on incumbents but also on entrants, entry may not result in competition if installed capacity is low, or may neglect high-cost areas if installed capacity or mandated coverage is high. These results hold no matter whether a price cap is in place or not, and do not depend on whether entry is capacity-based or facilitated through unbundling.
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Bibliographic InfoPaper provided by Universidade Nova de Lisboa, Faculdade de Economia in its series FEUNL Working Paper Series with number wp417.
Length: 27 pages
Date of creation: 2002
Date of revision:
Universal Service Obligations; Uniform Pricing; Price caps; Unbundling; Entry;
Find related papers by 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
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
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