Efficiency of Uniform Pricing in Universal Service Obligation

Jean-Christophe Poudou and Michel Roland

Working Papers from LAMETA, Universtiy of Montpellier

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.

Pages: 29 pages
Date: 2013-11, Revised 2013-11
New Economics Papers: this item is included in nep-com and nep-reg
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Related works:
Journal Article: Efficiency of uniform pricing in universal service obligations (2014)
Working Paper: Efficiency of uniform pricing in universal service obligations (2014)
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