IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/3421.html
   My bibliography  Save this paper

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
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/10/20/000012009_20041020152158/Rendered/PDF/WPS3421.pdf
    Download Restriction: no
    ---><---

    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," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 23-38.
    4. Omar Chisari & Antonio Estache & Catherine Waddams Price, 2003. "Access by the poor in Latin America's utility reform: subsidies and service obligations," Chapters, in: Cecilia Ugaz (ed.), Utility Privatization and Regulation, chapter 2, Edward Elgar Publishing.
    5. Tirole, Jean, 1986. "Procurement and Renegotiation," Journal of Political Economy, University of Chicago Press, vol. 94(2), pages 235-259, April.
    6. 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.
    7. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    8. Jean Tirole, 1985. "Hierarchies and Bureaucracies," Working papers 363, Massachusetts Institute of Technology (MIT), Department of Economics.
    9. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gerlach, Esther & Franceys, Richard, 2010. "Regulating Water Services for All in Developing Economies," World Development, Elsevier, vol. 38(9), pages 1229-1240, September.
    2. 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.
    3. Gasmi, Farid & Recuero Virto, Laura, 2005. "Telecommunications Technologies: Deployment in Developing Countries," MPRA Paper 2443, University Library of Munich, Germany.
    4. Luisa Sciandra, 2005. "Une évaluation des effets de la privatisation sur l’accès aux ressources en eau dans les pays en développement," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 76(2), pages 233-255, June.
    5. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Estache, Antonio & Laffont, Jean-Jacques & Zhang, Xinzhu, 2006. "Universal service obligations in LDCs: The effect of uniform pricing on infrastructure access," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1155-1179, August.
    2. Philippe Choné & Laurent Flochel & Anne Perrot, 1999. "Allocating and Funding Universal Service Obligations in a Competitive Network Market," Working Papers 99-55, Center for Research in Economics and Statistics.
    3. Gonzalez, P., 1999. "Specific Investment, Absence of Commitment and Observability," Papers 99-03, Laval - Recherche en Energie.
    4. Patrick Gonzàlez, 2004. "Investment and Screening Under Asymmetric Endogenous Information," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 502-519, Autumn.
    5. Emmanuelle Auriol & Pierre M. Picard, 2009. "Government Outsourcing: Public Contracting with Private Monopoly," Economic Journal, Royal Economic Society, vol. 119(540), pages 1464-1493, October.
    6. Noldeke, Georg & Samuelson, Larry, 2007. "Optimal bunching without optimal control," Journal of Economic Theory, Elsevier, vol. 134(1), pages 405-420, May.
    7. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
    8. Eric Maskin, 2004. "Jean-Jacques Laffont: A Look Back," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 913-923, September.
    9. Antonio Estache & Liam Wren-Lewis, 2009. "Toward a Theory of Regulation for Developing Countries: Following Jean-Jacques Laffont's Lead," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 729-770, September.
    10. Ilie, Laura & Losada, Ramiro, 2004. "Endogenous financing of the universal service," UC3M Working papers. Economics we044116, Universidad Carlos III de Madrid. Departamento de Economía.
    11. Dieter Bös, 2000. "Privatization under Asymmetric Information," CESifo Working Paper Series 244, CESifo.
    12. Georges Dionne & Claude Fluet, 2000. "original papers : Full pooling in multi-period contracting with adverse selection and noncommitment," Review of Economic Design, Springer;Society for Economic Design, vol. 5(1), pages 1-21.
    13. Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 27, pages 1557-1700, Elsevier.
    14. Rodrigo M. S. Moita & Claudio Paiva, 2013. "Political Price Cycles in Regulated Industries: Theory and Evidence," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 94-121, February.
    15. Bassanini, Anna & Pouyet, Jerome, 2005. "Strategic choice of financing systems in regulated and interconnected industries," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 233-259, February.
    16. Strausz, Roland, 2006. "Deterministic versus stochastic mechanisms in principal-agent models," Journal of Economic Theory, Elsevier, vol. 128(1), pages 306-314, May.
    17. Juan Pablo Montero, 1998. "Optimal Opt-in "Climate" Contracts," Journal of Applied Economics, Universidad del CEMA, vol. 1, pages 363-384, November.
    18. François MARECHAL, 2003. "Should we base procurement rules on the competition of linear incentive contracts ?," Cahiers de Recherches Economiques du Département d'économie 03.07, Université de Lausanne, Faculté des HEC, Département d’économie.
    19. David Martimort & Aggey Semenov & Lars Stole, 2017. "A Theory of Contracts with Limited Enforcement," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(2), pages 816-852.
    20. Cabrales, Antonio & Charness, Gary & Villeval, Marie Claire, 2006. "Competition, hidden information, and efficiency : an experiment," UC3M Working papers. Economics we071909, Universidad Carlos III de Madrid. Departamento de Economía.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:3421. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.