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Competitively neutral universal service obligations

Author

Listed:
  • Gautier, Axel
  • Wauthy, Xavier

Abstract

Universal service obligations impose specific costs on the universal service provider and the latter may call for an appropriate compensation. Most often, a two-step procedure is put forward to finance the universal service in a competitive environment. Firstly, the cost of the universal service is assessed; secondly, the provider must be compensated for this cost. We argue that this procedure is problematic because the implementation of a compensation scheme affects the behavior of market participants and leads to an overcompensation of the universal service provider. We put forward an alternative approach to this problem that fully acknowledges the distortions that result from the compensation mechanism.

Suggested Citation

  • Gautier, Axel & Wauthy, Xavier, 2012. "Competitively neutral universal service obligations," Information Economics and Policy, Elsevier, vol. 24(3), pages 254-261.
  • Handle: RePEc:eee:iepoli:v:24:y:2012:i:3:p:254-261
    DOI: 10.1016/j.infoecopol.2012.04.001
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    References listed on IDEAS

    as
    1. Axel Gautier & Xavier Wauthy, 2010. "Price competition under universal service obligations," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(3), pages 311-326.
    2. Philippe Choné & Laurent Flochel & Anne Perrot, 1999. "Allocating and Funding Universal Service Obligations in a Competitive Network Market," Working Papers 99-55, Center for Research in Economics and Statistics.
    3. J. Ignacio Conde-Ruiz & Paola Profeta, "undated". "What Social Security: Beveridgean or Bismarckian?," Working Papers 2003-16, FEDEA.
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    7. Dreze, Jean & Srinivasan, P. V., 1997. "Widowhood and poverty in rural India: Some inferences from household survey data," Journal of Development Economics, Elsevier, vol. 54(2), pages 217-234, December.
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    10. Jaag Christian, 2011. "What is an Unfair Burden? Compensating the Net Cost of Universal Service Provision," Review of Network Economics, De Gruyter, vol. 10(3), pages 1-32, September.
    11. Anderson, Simon P. & de Palma, Andre & Kreider, Brent, 2001. "Tax incidence in differentiated product oligopoly," Journal of Public Economics, Elsevier, vol. 81(2), pages 173-192, August.
    12. Valletti, Tommaso M & Hoernig, Steffen & Barros, Pedro P, 2002. "Universal Service and Entry: The Role of Uniform Pricing and Coverage Constraints," Journal of Regulatory Economics, Springer, vol. 21(2), pages 169-190, March.
    13. H. Cremer & F. Gasmi & A. Grimaud & J. J. Laffont, 2001. "Universal Service: An economic perspective," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 72(1), pages 5-43, March.
    14. Mirabel, F. & Poudou, J.-C. & Roland, M., 2009. "Universal service obligations: The role of subsidization schemes," Information Economics and Policy, Elsevier, vol. 21(1), pages 1-9, February.
    15. Chone, Philippe & Flochel, Laurent & Perrot, Anne, 2002. "Allocating and funding universal service obligations in a competitive market," International Journal of Industrial Organization, Elsevier, vol. 20(9), pages 1247-1276, November.
    16. Rodriguez, Frank & Storer, David, 2000. "Alternative approaches to estimating the cost of the USO in posts," Information Economics and Policy, Elsevier, vol. 12(3), pages 285-299, September.
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    18. Tim Goedemé & Wim Van Lancker, 2009. "A Guaranteed Minimum Income for Europe’s Elderly. Options and Pitfalls in the Design of a Harmonised Basic Pension Scheme in the European Union," Working Papers 0901, Herman Deleeck Centre for Social Policy, University of Antwerp.
    19. Panzar, John C., 2000. "A methodology for measuring the costs of universal service obligations," Information Economics and Policy, Elsevier, vol. 12(3), pages 211-220, September.
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    Citations

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    Cited by:

    1. Gautier Axel & Poudou Jean-Christophe, 2014. "Reforming the Postal Universal Service," Review of Network Economics, De Gruyter, vol. 13(4), pages 453-477, December.
    2. 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.
    3. repec:eee:indorg:v:52:y:2017:i:c:p:63-95 is not listed on IDEAS
    4. 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.
    5. 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.

    More about this item

    Keywords

    L43; L51; Universal service obligations; Cost-sharing mechanism; Competitive neutrality;

    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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