Gradual Network Expansion and Universal Service Obligations
Universal service obligations are usually not competitively neutral as they modify the way firms compete in the market. In this paper, we consider a continuum of local markets in a dynamic setting with a stochastically growing demand. The incumbent must serve all markets (ubiquity) possibly at a uniform price and an entrant decides on its market coverage before firms compete in prices. Connecting a market involves a sunk cost. We show that the imposition of a uniform price constraint modifies the timing of entry: for low connection cost markets, entry occurs earlier while for high connection cost markets, entry occurs later.
|Date of creation:||2011|
|Contact details of provider:|| Postal: Boulevard du Rectorat, 7, Batiment 31, boite 39, 4000 Liege|
Phone: + 32 (0) 4 366 31 08
Fax: + 32 (0) 4 366 31 06
Web page: http://www2.ulg.ac.be/crepp/
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.:
- De Villemeur Etienne Billette & Cremer Helmuth & Boldron Francois & Roy Bernard, 2008. "Worksharing: A Calibrated Model," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-22, June.
- Gonzales d’Alcantara & Axel Gautier, 2008.
"National Postal Strategies after a Full Postal Market Opening,"
Chapters,in: Competition and Regulation in the Postal and Delivery Sector, chapter 12
Edward Elgar Publishing.
- D’ALCANTARA, Gonzales & GAUTIER, Axel, "undated". "National postal strategies after a full postal market opening," CORE Discussion Papers RP 2006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- repec:bpj:rneart:v:7:y:2008:i:2:p:272-293 is not listed on IDEAS
- repec:cor:louvrp:-2006 is not listed on IDEAS Full references (including those not matched with items on IDEAS)