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Efficiency of Uniform Pricing in Universal Service Obligation

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  • Jean-Christophe Poudou
  • Michel Roland

Abstract

We provide an efficiency justi cation for the imposition of the uniform pricing constraint in universal service obligations (USO), where USO are de fined as a set of constraints imposed on fi rms belonging to a network industry. Besides the uniform pricing (UP) constraint, which is an obligation to serve all consumers at an identical price, constraints considered are the coverage constraint (CC), an obligation imposed to one of the firms to serve a given segment of the market, as well as the license constraint (LC), a minimum or a maximum coverage restriction imposed on entrants. We show that adding the UP constraint to both a CC and a LC brings an increase in welfare. Our contribution comes from the full recognition of the role of a LC in well-designed USO and we illustrate this role with the particular case of linear demand.

Suggested Citation

  • Jean-Christophe Poudou & Michel Roland, 2013. "Efficiency of Uniform Pricing in Universal Service Obligation," Working Papers 13-13, LAMETA, Universtiy of Montpellier, revised Nov 2013.
    • Handle: RePEc:lam:wpaper:13-13
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    Cited by:

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    2. Axel Gautier & Jean-Christophe Poudou & Michel Roland, 2022. "Net Neutrality and Universal Service Obligations," Working Papers hal-03609917, HAL.
    3. Houpis, George & Serdarevic, Goran & Vetterle, Jonas, 2016. "Supply-side measures for policy makers to promote mobile broadband coverage," 27th European Regional ITS Conference, Cambridge (UK) 2016 148674, International Telecommunications Society (ITS).
    4. Poudou, Jean-Christophe & Roland, Michel, 2017. "Equity justifications for universal service obligations," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 63-95.
    5. Leszek Borowiec, 2021. "Direct subsidies and compensation funds in financing of universal postal services," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(3), pages 545-564, March.

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    JEL classification:

    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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