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Universal service obligations in developing countries

Author

Listed:
  • Estache, Antonio
  • Laffont, Jean-Jacques
  • Xinzhu Zhang

Abstract

This paper develops a model to analyze the impacts of asymmetric information on optimal universal, service policy in the public utilities of developing countries. Optimal universal service policy is implemented using two regulatory instruments: pricing and network investment. Under discriminatory pricing asymmetric information leads to a higher price, and smaller network in the rural area, than under full information. Under uniform pricing, the price is also lower but the network is even smaller. In addition, under both pricing regimes, not only the firm, but also taxpayers have incentives to collude with the regulator.

Suggested Citation

  • Estache, Antonio & Laffont, Jean-Jacques & Xinzhu Zhang, 2004. "Universal service obligations in developing countries," Policy Research Working Paper Series 3421, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3421
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    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/10/20/000012009_20041020152158/Rendered/PDF/WPS3421.pdf
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    References listed on IDEAS

    as
    1. Gasmi, F. & Laffont, J. J. & Sharkey, W. W., 2000. "Competition, universal service and telecommunications policy in developing countries," Information Economics and Policy, Elsevier, vol. 12(3), pages 221-248, September.
    2. 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, March.
    3. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 23-38.
    4. Jean Tirole, 1985. "Hierarchies and Bureaucracies," Working papers 363, Massachusetts Institute of Technology (MIT), Department of Economics.
    5. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
    6. Omar Chisari & Antonio Estache & Catherine Waddams Price, 2003. "Access by the poor in Latin America's utility reform: subsidies and service obligations," Chapters,in: Utility Privatization and Regulation, chapter 2 Edward Elgar Publishing.
    7. Laffont, Jean-Jacques & N'Gbo, Ake, 2000. "Cross-subsidies and network expansion in developing countries," European Economic Review, Elsevier, vol. 44(4-6), pages 797-805, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Gasmi, Farid & Recuero Virto, Laura, 2005. "Telecommunications Technologies: Deployment in Developing Countries," MPRA Paper 2443, University Library of Munich, Germany.
    2. Gerlach, Esther & Franceys, Richard, 2010. "Regulating Water Services for All in Developing Economies," World Development, Elsevier, vol. 38(9), pages 1229-1240, September.
    3. Luo, Guo-liang & Guo, Yi-wei, 2013. "Rural electrification in China: A policy and institutional analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 23(C), pages 320-329.
    4. Esther Gerlach & Richard Franceys, 2010. "'Standpipes and beyond'-a universal water service dynamic," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(4), pages 455-469.

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