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Equity justifications for universal service obligations

Author

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  • Jean-Christophe Poudou

    (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier, Labex Entreprendre - UM - Université de Montpellier)

  • Michel Roland

    (CREATE, Centre de Recherche en économie de l'Environnement, de l'Agroalimentaire, des Transports et de l'Énergie - ULaval - Université Laval [Québec], ULaval - Université Laval [Québec])

Abstract

Equity is often invoked as a possible justification for the imposition of universal service obligations (USOs). However, no previous analysis supports a formal link between equity and USO. In this paper, we describe the extent to which the im- position of USOs in oligopolistic network industries can meet the objectives of an inequality-averse regulator. We show that USOs can be used for equity purposes provided that the regulator is able to control the competitive structure of the industry. We also show that the uniform pricing constraint, which is an obligation to offer the same price conditions to all consumers, is welfare-enhancing but rather surprisingly, it does not necessarily improve equity.

Suggested Citation

  • Jean-Christophe Poudou & Michel Roland, 2017. "Equity justifications for universal service obligations," Post-Print hal-01810301, HAL.
    • Handle: RePEc:hal:journl:hal-01810301
    DOI: 10.1016/j.ijindorg.2017.01.007
    Note: View the original document on HAL open archive server: https://hal.umontpellier.fr/hal-01810301
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    References listed on IDEAS

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    1. 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.
    2. 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.
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    17. 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: Michael A. Crew & Paul R. Kleindorfer (ed.), Competition and Regulation in the Postal and Delivery Sector, chapter 2, Edward Elgar Publishing.
    18. 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.
    19. 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.
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    Cited by:

    1. Marion Podesta, Jean-Christophe Poudou, and Michel Roland, 2021. "The Price Impact of Energy Vouchers," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 27-54.

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    More about this item

    Keywords

    Universal service obligations; Price constraint; equity; coverage and price constraints; regulation; Coverage constraint;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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