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Universal(ly bad) service - providing infrastructure services to rural and poor urban consumers

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Author Info

  • Clarke, George R.G.
  • Wallsten, Scott J.

Abstract

Until recently, utility services (telecommunications, power, water, and gas) throughout the world were provided by large, usually state-owned, monopolies. However, encouraged by technological change, regulatory innovation, and pressure from international organizations, many developing countries are privatizing state-owned companies and introducing competition. Some observers worry that even if reforms improve efficiency, they might compromise an important public policy goal-ensuring"universal access"for low-income and rural households. The authors review the motivation for universal service, methods used to try to achieve it under monopoly service provision, how reforms might affect these approaches, and the theoretical and empirical evidence of the impact of reform on these consumers. Next, using household data from around the world, they investigate empirically the historical performance of public monopolies in meeting universal service obligations and the impact of reform. The results show the massive failure of state monopolies to provide service to poor and rural households everywhere except Eastern Europe. Moreover, while the data are limited, the evidence suggests that reforms have not harmed poor and rural consumers, and in many cases have improved their access to utility services. Nevertheless, because competition undermines traditional methods of funding universal service objectives (cross-subsidies), the authors also review mechanisms that could finance these objectives without compromising the benefits of reforms.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2868.

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Date of creation: 31 Jul 2002
Date of revision:
Handle: RePEc:wbk:wbrwps:2868

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Related research

Keywords: Economic Theory&Research; Health Economics&Finance; Municipal Financial Management; Environmental Economics&Policies; Decentralization; Environmental Economics&Policies; Economic Theory&Research; Health Economics&Finance; Town Water Supply and Sanitation; Municipal Financial Management;

References

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  1. Antonio Estache, 1994. "World Development Report: Infrastructure for Development," ULB Institutional Repository 2013/44144, ULB -- Universite Libre de Bruxelles.
  2. Hank Intven, 2000. "Telecommunications Regulation Handbook," World Bank Publications, The World Bank, number 15249, October.
  3. Rosston, G.R. & Wimmer, B.S., 2000. "The "State" of Universal Service," Papers 99-018, United Nations World Employment Programme-.
  4. Rosston, Gregory L. & Wimmer, Bradley S., 2000. "The 'state' of universal service," Information Economics and Policy, Elsevier, vol. 12(3), pages 261-283, September.
  5. Menard, Claude & Clarke, George, 2000. "A transitory regime : water supply in Conakry, Guinea," Policy Research Working Paper Series 2362, The World Bank.
  6. Wolak, Frank A., 1996. "Can universal service survive in a competitive telecommunications environment? Evidence from the United States consumer expenditure survey," Information Economics and Policy, Elsevier, vol. 8(3), pages 163-203, September.
  7. Chisari, Omar & Estache, Antonio, 1999. "Universal service obligations in utility concession contracts and the needs of the poor in Argentina's privatization," Policy Research Working Paper Series 2250, The World Bank.
  8. Onwumechili, Chuka, 2001. "Dream or reality: providing universal access to basic telecommunications in Nigeria?," Telecommunications Policy, Elsevier, vol. 25(4), pages 219-231, May.
  9. Chisari, Omar & Estache, Antonio, 1999. "The Needs of the Poor in Infraestructure Privatization. The Role of Universal Service Obligations. The Case of Argentina," UADE Textos de Discusión 3_1999, Instituto de Economía, Universidad Argentina de la Empresa.
  10. Clarke, George R. G. & Menard, Claude & Maria Zuluaga, Ana, 2002. "Measuring the Welfare Effects of Reform: Urban Water Supply in Guinea," World Development, Elsevier, vol. 30(9), pages 1517-1537, September.
  11. Alcazar, Lorena & Abdala, Manuel A. & Shirley, Mary M., 2000. "The Buenos Aires water concession," Policy Research Working Paper Series 2311, The World Bank.
  12. Geoffrey Cannock, 2001. "Telecom Subsidies : Output-Based Contracts for Rural Services in Peru," World Bank Other Operational Studies 11384, The World Bank.
  13. Ros, Agustin J, 1999. "Does Ownership or Competition Matter? The Effects of Telecommunications Reform on Network Expansion and Efficiency," Journal of Regulatory Economics, Springer, vol. 15(1), pages 65-92, January.
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Citations

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Cited by:
  1. Philippe Marin, 2009. "Public-Private Partnerships for Urban Water Utilities : A Review of Experiences in Developing Countries," World Bank Publications, The World Bank, number 2703, October.
  2. Antonio Estache & Jean-Jacques Laffont & Xinzhu Zhang, 2006. "Universal service obligations in LDCs: the effect of uniform pricing on infrastructure access," ULB Institutional Repository 2013/13366, ULB -- Universite Libre de Bruxelles.
  3. Biancini, Sara, 2011. "Behind the scenes of the telecommunications miracle: An empirical analysis of the Indian market," Telecommunications Policy, Elsevier, vol. 35(3), pages 238-249, April.
  4. Kirkpatrick, Colin & Parker, David & Zhang, Yin-Fang, 2004. "State versus Private Sector Provision of Water Services in Africa: A Statistical, DEA and Stochastic Cost Frontier Analysis," Centre on Regulation and Competition (CRC) Working papers 30604, University of Manchester, Institute for Development Policy and Management (IDPM).
  5. Kirkpatrick, Colin & Parker, David & Zhang, Yin-Fang, 2004. "Foreign Direct Investment in Infrastructure in Developing Countries: Does Regulation Make a Difference?," Centre on Regulation and Competition (CRC) Working papers 30703, University of Manchester, Institute for Development Policy and Management (IDPM).
  6. Garbacz, Christopher & Thompson, Herbert Jr., 2005. "Universal telecommunication service: A world perspective," Information Economics and Policy, Elsevier, vol. 17(4), pages 495-512, October.
  7. Parker, David & Kirkpatrick, Colin & Figueira-Theodorakopoulou, Catarina, 2005. "Infrastructure Regulation and Poverty Reduction in Developing Countries: A Review of the Evidence and a Research Agenda," Centre on Regulation and Competition (CRC) Working papers 30608, University of Manchester, Institute for Development Policy and Management (IDPM).
  8. Marco Schouten & Klaas Schwartz, 2006. "Water as a political good: implications for investments," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 6(4), pages 407-421, December.
  9. Roger G. Noll & Scott J. Wallsten, 2005. "Universal Telecommunications Service in India," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 2(1), pages 255-288.
  10. Luis A. Andrés & J. Luis Guasch & Thomas Haven & Vivien Foster, 2008. "The Impact of Private Sector Participation in Infrastructure : Lights, Shadows, and the Road Ahead," World Bank Publications, The World Bank, number 6545, October.
  11. Chisari, Omar O. & Ferro, Gustavo, 2005. "Macroeconomic shocks and regulatory dilemmas: The affordability and sustainability constraints and the Argentine default experience," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 403-420, May.
  12. Clive Harris, 2003. "Private Participation in Infrastructure in Developing Countries : Trends, Impacts, and Policy Lessons," World Bank Publications, The World Bank, number 15124, October.
  13. Kirkpatrick, Colin & Parker, David, 2004. "Regulation and the Privatisation of Water Services in Developing Countries: Assessing the Impact of the General Agreement on Trade in Services (GATS)," Centre on Regulation and Competition (CRC) Working papers 30600, University of Manchester, Institute for Development Policy and Management (IDPM).
  14. Devkar, Ganesh A. & Mahalingam, Ashwin & Deep, Akash & Thillairajan, A., 2013. "Impact of Private Sector Participation on access and quality in provision of electricity, telecom and water services in developing countries: A systematic review," Utilities Policy, Elsevier, vol. 27(C), pages 65-81.

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