Funding Universal Service: The Effect of Telecommunications Subsidy Programs on Competition and Retail Prices
There is general concern that producer subsidies distort competition. We examine a telecommunications subsidy system that transfers money from low cost regions to high cost regions of the U.S. Even though the system is designed to be competitively neutral, we find evidence that the system, combined with carrier of last resort policies, promotes cream skimming by entrants in low cost areas and less entry in high cost areas, where incumbents are more likely than entrants to receive subsidies. We are unable to rule out the possibility that state regulatory policies favor incumbents in states that are net beneficiaries of the subsidy system.
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.:
- Carlos Martins-Filho & John W. Mayo, 1993. "Demand and Pricing of Telecommunications Services: Evidence and Welfare Implications," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 439-454, Autumn.
- Zolnierek, James & Eisner, James & Burton, Ellen, 2001. "An Empirical Examination of Entry Patterns in Local Telephone Markets," Journal of Regulatory Economics, Springer, vol. 19(2), pages 143-159, March.
- Donald Alexander & Robert Feinberg, 2004. "Entry in Local Telecommunication Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(2), pages 107-127, 06.
- T. Randolph Beard & David L. Kaserman & John W. Mayo, 2003. "A Graphical Exposition of the Economic Theory of Regulation," Economic Inquiry, Western Economic Association International, vol. 41(4), pages 592-606, October.
- Eriksson, Ross C & Kaserman, David L & Mayo, John W, 1998. "Targeted and Untargeted Subsidy Schemes: Evidence from Postdivestiture Efforts to Promote Universal Telephone Service," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 477-502, October.
- Garbacz, Christopher & Thompson, Herbert G, 2002. "Estimating Telephone Demand with State Decennial Census Data from 1970-1990," Journal of Regulatory Economics, Springer, vol. 21(3), pages 317-329, May.
- 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.
- Rosston, Gregory L. & Wimmer, Bradley S., 2000. "The 'state' of universal service," Information Economics and Policy, Elsevier, vol. 12(3), pages 261-283, September.
- Mueller, Milton, 1993. "Universal service in telephone history : A reconstruction," Telecommunications Policy, Elsevier, vol. 17(5), pages 352-369, July.
- Barros, Pedro P. & Seabra, M. Carmo, 1999. "Universal service: does competition help or hurt?," Information Economics and Policy, Elsevier, vol. 11(1), pages 45-60, March.
- Chone, Philippe & Flochel, Laurent & Perrot, Anne, 2000.
"Universal service obligations and competition,"
Information Economics and Policy,
Elsevier, vol. 12(3), pages 249-259, September.
- Anne Perrot & Laurent Flochel & Philippe Choné, 2000. "Universal service obligations and competition," Post-Print halshs-00144073, HAL.
- Trevor R. Roycroft, 2005. "Empirical Analysis of Entry in the Local Exchange Market: The Case of Pacific Bell," Contemporary Economic Policy, Western Economic Association International, vol. 23(1), pages 107-115, 01.
- Lukasz Grzybowski, 2005. "Regulation of Mobile Telephony across the European Union: An Empirical Analysis," Journal of Regulatory Economics, Springer, vol. 28(1), pages 47-67, 07.
- Rosston, G.R. & Wimmer, B.S., 2000. "The "State" of Universal Service," Papers 99-018, United Nations World Employment Programme-.
- Wolak, Frank A., 1996. "Can universal service survive in a competitive telecommunications environment? Evidence from the United States consumer expenditure survey," Information Economics and Policy, Elsevier, vol. 8(3), pages 163-203, September. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:net:wpaper:0708. 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: (Nicholas Economides)
If references are entirely missing, you can add them using this form.