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Intellectual Property Rights and the Future of Universal Service Obligations in Communications

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  • Christian Jaag

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Abstract

Network industries are traditionally strongly influenced by sector-specific regulation; especially universal service obligations (USO) play an important role. In these sectors, USO impact market forces by shaping competition asymmetrically. They also interfere with other regulations such as intellectual property laws which are of increasing importance in these industries. This interaction has recently become of interest in the postal sector due to its recent convergence with telecommunications and the emergence of innovative services at the interface of the two sectors. In free markets, the design of intellectual property right trades off investment incentives against market distortions due to (temporary) exclusive rights. USO distort competition and thereby affect the optimal solution of this trade-off. The paper discusses various aspects of the influence of patents on universal service provision. It also illustrates these effects by means of a simple model of an innovation race under asymmetric regulation and with forced licensing to derive regulatory and policy implications to safeguard a cost-effective and consumer-oriented provision of universal services.

Suggested Citation

  • Christian Jaag, 2013. "Intellectual Property Rights and the Future of Universal Service Obligations in Communications," Working Papers 0040, Swiss Economics.
  • Handle: RePEc:chc:wpaper:0040
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    File URL: http://www.swiss-economics.ch/RePEc/files/0040Jaag.pdf
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    References listed on IDEAS

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    1. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 1049-1090.
    2. Siebert, Ralph & von Graevenitz, Georg, 2006. "How Licensing Resolves Hold-Up: Evidence from a Dynamic Panel Data Model with Unobserved Heterogeneity," CEPR Discussion Papers 5436, C.E.P.R. Discussion Papers.
    3. M. Maegli & C. Jaag & M. Koller & U. Trinkner, 2010. "Postal Markets and Electronic Substitution: What is the Impact of Intermodal Competition on Regulatory Practices and Institutions?," Competition and Regulation in Network Industries, Intersentia, vol. 11(4), pages 382-398, December.
    4. Helmuth Cremer & Philippe De Donder & François Boldron & Bernard Roy, 2008. "Social Costs and Benefits of the Universal Service Obligation in the Postal Market," Chapters,in: Competition and Regulation in the Postal and Delivery Sector, chapter 2 Edward Elgar Publishing.
    5. Daron Acemoglu & Ufuk Akcigit, 2006. "State-Dependent Intellectual Property Rights Policy," NBER Working Papers 12775, National Bureau of Economic Research, Inc.
    6. Jaag Christian, 2011. "Entry Deterrence and the Calculation of the Net Cost of Universal Service Obligations," Review of Network Economics, De Gruyter, vol. 10(1), pages 1-19, March.
    7. Denicolo, Vincenzo, 1996. "Patent Races and Optimal Patent Breadth and Length," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 249-265, September.
    8. Suzanne Scotchmer, 2006. "Innovation and Incentives," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262693437, January.
    9. Christian Jaag & Urs Trinkner, 2011. "The future of the USO - Economic rationale for universal services and implications for a future-oriented USO," Working Papers 0026, Swiss Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Universal service obligation; Communications; Intellectual Property;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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