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Competitively Neutral Universal Service Obligations

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  • Axel Gautier
  • Xavier Wauthy

Abstract

Universal service obligations impose specific costs on the universal service provider. The measure of these costs and their financing have been studied along two complementary lines of reasoning: is the uni- versal service obligation sustainable? Who should bear its costs? Most often, a two-step procedure is put forward. In a first step the cost of USO must be assessed; in a second step the USP must be compensated for this cost. In this paper we argue that this procedure is most often problematic because the implementation of the compensation scheme directly affects the effective cost of USO. We therefore put forward an alternative approach to this problem which does not rely on this two- step procedure and fully acknowledges the distortions that result from the compensation mechanism.

Suggested Citation

  • Axel Gautier & Xavier Wauthy, 2010. "Competitively Neutral Universal Service Obligations," CREPP Working Papers 1008, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
    • Handle: RePEc:rpp:wpaper:1008
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    Cited by:

    1. Axel Gautier & Jean-Christophe Poudou & Michel Roland, 2024. "Net Neutrality and Universal Service Obligations: It’s All About Bandwidth," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(4), pages 581-614, June.
    2. Srinuan, Chalita, 2014. "Uncertainty of public pay phone in Thailand: Implications for the universal service obligation," Telecommunications Policy, Elsevier, vol. 38(8), pages 730-740.
    3. Gautier Axel & Paolini Dimitri, 2011. "Universal Service Financing in Competitive Postal Markets: One Size Does Not Fit All," Review of Network Economics, De Gruyter, vol. 10(3), pages 1-30, September.
    4. Poudou, Jean-Christophe & Roland, Michel, 2014. "Efficiency of uniform pricing in universal service obligations," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 141-152.
    5. Gautier Axel & Poudou Jean-Christophe, 2014. "Reforming the Postal Universal Service," Review of Network Economics, De Gruyter, vol. 13(4), pages 453-477, December.
    6. Poudou, Jean-Christophe & Roland, Michel, 2017. "Equity justifications for universal service obligations," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 63-95.

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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

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