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Universal service obligations and competition

Author

Listed:
  • Philippe Choné
  • Laurent Flochel

    (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne)

  • A. Perrot

Abstract

We provide some elements to assess and compare various regulatory rules for the allocation and funding of universal service obligations (USOs). We restrict ourselves to ubiquity and spatial non discrimination constraints. We examine the welfare consequences of two systems: First, a regulation where USOs are imposed only on the incumbent firm (restricted-entry regulation) and second, a 'pay or play' rule where the entrant may serve non profitable users. Whereas pay or play regulation dominates when only the ubiquity constraint is at work, this result no longer holds when non discrimination is added. (C) 2000 Elsevier Science B.V. All rights reserved.We provide some elements to assess and compare various regulatory rules for the allocation and funding of universal service obligations (USOs). We restrict ourselves to ubiquity and spatial non discrimination constraints. We examine the welfare consequences of two systems: First, a regulation where USOs are imposed only on the incumbent firm (restricted-entry regulation) and second, a `pay or play' rule where the entrant may serve non profitable users. Whereas pay or play regulation dominates when only the ubiquity constraint is at work, this result no longer holds when non discrimination is added.

Suggested Citation

  • Philippe Choné & Laurent Flochel & A. Perrot, 2000. "Universal service obligations and competition," Post-Print hal-02878018, HAL.
    • Handle: RePEc:hal:journl:hal-02878018
    DOI: 10.1016/S0167-6245(00)00014-7
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