Funding Universal Service Obligations with an Essential Facility: Charges vs. Taxes and Subsidies

C. Madet, François Mirabel, J.-C. Poudou and M. Roland

Cahiers du CREDEN (CREDEN Working Papers) from CREDEN (Centre de Recherche en Economie et Droit de l'Energie), Faculty of Economics, University of Montpellier 1

Abstract: This paper compares three schemes for funding Universal Service Obligations in network industries with an essential facility: an uplift to the network access charge, the establishment of a Universal Service (US) fund financed through a lump-sum tax and a US fund financed through a unit tax. The comparison is made under a duopoly structure with a potential entrant and an incumbent, which owns the essential facility and is responsible for universal service. The incumbent is also constrained to offer the same price on all markets. Using a social welfare criteria, we show that the US fund financed with a lump sum tax dominates the other two schemes, while the US fund with unit tax is equivalent to the access charge uplift.

Keywords: UNIVERSAL SERVICE OBLIGATIONS; ACCESS CHARGES; REGULATION (search for similar items in EconPapers)
JEL-codes: L43 L51 L52 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2004
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mop:credwp:04.07.47

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