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Allocating and Funding Universal Service Obligations in a Competitive Network Market

  • Philippe Chone

    (INSEE and CREST-LEI)

  • Laurent Flochel

    (University of Evry - Val d'Essonne)

  • Anne Perrot

    (CREST-LEI)

We examine, in a network market open to competition, various mechanisms of allocating and funding ''universal service obligations'' among agents (rival operators and consumers). The obligations we consider are geographic ubiquity and non discrimination. We analyze, from both the efficiency and equity point of views, the respective advantages of a ''restricted-entry'' system (where the entrant is not allowed to serve high cost consumers) and the ''pay or play'' system at work for instance in Australia. We show that the pay or play regulation always dominates the restricted-entry regulation under ubiquity constraint alone. This result no longer holds when the regulator imposes also the non discrimination constraint.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 0213.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:0213
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  1. Anton, James J. & Vander Weide, James H. & Vettas, Nikolaos, 1999. "Strategic Pricing and Entry under Universal Service and Cross-Market Price Constraints," Working Papers 99-04, Duke University, Department of Economics.
  2. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-50, June.
  3. Gasmi, Farid & Laffont, Jean-Jacques & Sharkey, William, 1999. "Competition, Universal Service and Telecommunications Policy in Developing Countries," IDEI Working Papers 92, Institut d'Économie Industrielle (IDEI), Toulouse.
  4. Paul R. Milgrom, 1985. "Auction Theory," Cowles Foundation Discussion Papers 779, Cowles Foundation for Research in Economics, Yale University.
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