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Endogenous financing of the universal service

Ramiro Losada and Laura Ilie

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We address the question of endogenous financing of the Universal Service Obligations and we compare it with the exogenous financing. A fund is created and fed through a tax firms pay. We show that the way these funds are implemented by the current regulatory regimes at work goes against the social welfare. We propose a new way of implementing the fund that improves welfare. Moreover, we challenge the proportionality payment principle as it leads to lower welfare.

Date: 2004-07
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