Mechanisms of Funding for Universal Service Obligations: the Electricity Case
The transition towards a more competitive regime in network industries (and specially in electricity sector) raises the relevant question of funding for the Universal Service Obligations (USOs). Our paper focuses on two ways of funding for universal service and equal treatment obligations (Ubiquity and Non Discrimination constraints): the funding through access charge (CS regime) or taxation (T regime). Using a network model including competition between an historical monopoly (in charge for the USOs) and an entrant, we obtain some results concerning gains and losses of social welfare due to those mechanisms. We show that most of the time it is socially better to let the historical monopoly be active whatever the type of funding for USOs applying, and whatever profitability of the firms is. However, when the entrant is active, we can highlight that the introduction of the T regime (compared to the CS one) implies either welfare deterioration or an entry prevention strategy by the historical Þrm. Therefore, the T regime could not be an argument for the regulator to promote vertical separation of the historical firm (according to the European community line).
|Date of creation:||2003|
|Contact details of provider:|| Postal: CREDEN, Faculté d'Economie, Avenue Raymond Dugrand, CS 79606, 34960 MONTPELLIER Cedex 2, France|
Phone: 33 (0)4 67 15 83 60
Fax: 33 (0)4 67 15 84 04
Web page: http://www.creden.univ-montp1.fr
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anton, James J. & Vander Weide, James H. & Vettas, Nikolaos, 1999.
"Strategic Pricing and Entry under Universal Service and Cross-Market Price Constraints,"
99-04, Duke University, Department of Economics.
- Anton, James J & Vander Weide, James H & Vettas, Nikolaos, 1998. "Strategic Pricing and Entry under Universal Service and Cross-Market Price Constraints," CEPR Discussion Papers 1922, C.E.P.R. Discussion Papers.
- David, L. & Mirabel, F., 2000. "Structure du marche gazier americain, reglementation et tarification de l'acces des tiers au reseau," Cahiers du CREDEN (CREDEN Working Papers) 00.06.17, CREDEN (Centre de Recherche en Economie et Droit de l'Energie), Faculty of Economics, University of Montpellier 1.
- Armstrong, Mark & Doyle, Chris & Vickers, John, 1996.
"The Access Pricing Problem: A Synthesis,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 44(2), pages 131-150, June.
- Armstrong, M. & Doyle, C. & Vickers, J., 1995. "The access pricing problem: a synthesis," Discussion Paper Series In Economics And Econometrics 9532, Economics Division, School of Social Sciences, University of Southampton.
- H. Cremer & F. Gasmi & A. Grimaud & J. J. Laffont, 2001. "Universal Service: An economic perspective," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 72(1), pages 5-43, 03.
- Mark Armstrong, 2001. "Access Pricing, Bypass, and Universal Service," American Economic Review, American Economic Association, vol. 91(2), pages 297-301, May.
- Madet, C. & Mirabel, F. & Poudou, J.-C. & Roland, M., 2004. "Funding Universal Service Obligations with an Essential Facility: Charges vs. Taxes and Subsidies," Cahiers du CREDEN (CREDEN Working Papers) 04.07.47, CREDEN (Centre de Recherche en Economie et Droit de l'Energie), Faculty of Economics, University of Montpellier 1.
- repec:crs:wpaper:9955 is not listed on IDEAS
- 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.
- Philippe Choné & Laurent Flochel & Anne Perrot, 1999.
"Allocating and Funding Universal Service Obligations in a Competitive Network Market,"
99-55, Centre de Recherche en Economie et Statistique.
- Philippe Chone & Laurent Flochel & Anne Perrot, 2000. "Allocating and Funding Universal Service Obligations in a Competitive Network Market," Econometric Society World Congress 2000 Contributed Papers 0213, Econometric Society.
When requesting a correction, please mention this item's handle: RePEc:mop:credwp:03.11.41. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Olivier ROUSSE)
If references are entirely missing, you can add them using this form.