Universal Service Regulation and Network Effects in Services of General Economic Interest in the European Union

Carlos Pateiro-Rodríguez, Federico Martín-Bermúdez (), Carlos Pateiro-López and Manuel Escourido-Calvo
Additional contact information
Carlos Pateiro-Rodríguez: Department of Applied Economics, University of A Coruña, 15008 A Coruña, Spain
Federico Martín-Bermúdez: Department of Applied Economics, University of A Coruña, 15008 A Coruña, Spain
Carlos Pateiro-López: Department of Taxation, Tax and Financial Advisor, 15011 A Coruña, Spain
Manuel Escourido-Calvo: Department of Business, University of A Coruña, 15008 A Coruña, Spain

Economies, 2024, vol. 12, issue 10, 1-19

Abstract: The process of the liberalisation of services of general economic interest (SGEI) in the EU adopted the universal service (US) regulatory model. The objectives of the process were to strengthen free competition and improve social welfare. SGEIs have the characteristic of networked services and, as such, generate network externalities, as considered by the theory of market failures. This paper analyses the potential of the US in its role as a remedy for network externalities. In the SGEI context, the large number of participants reinforces network externalities, while limiting coordination mechanisms between users. Based on the relevant literature, a theoretical debate arises around the contribution of universal service obligations (USOs) to social welfare. A microeconomic analysis shows that USOs modify consumers’ utility functions by shifting from inefficient market equilibria to efficient equilibria, thereby improving social welfare.

Keywords: services of general economic interest; universal service; network externalities; social welfare (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7099/12/10/280/pdf (application/pdf)
https://www.mdpi.com/2227-7099/12/10/280/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:12:y:2024:i:10:p:280-:d:1500558

Access Statistics for this article

Economies is currently edited by Ms. Hongyan Zhang

More articles in Economies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().