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Competitively neutral universal service obligations

Listed author(s):
  • Gautier, Axel
  • Wauthy, Xavier

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.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167624512000273
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Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 24 (2012)
Issue (Month): 3 ()
Pages: 254-261

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Handle: RePEc:eee:iepoli:v:24:y:2012:i:3:p:254-261
DOI: 10.1016/j.infoecopol.2012.04.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505549

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  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.
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  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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  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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