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On the Nature of Price Competition Under Universal Service Obligations: a Note

Axel Gautier () and Xavier Wauthy

CREPP Working Papers from Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège

Abstract: The imposition of universal coverage and uniform pricing constraints, as part of the universal service obligations, makes the universal service provider less aggressive in the price game when it competes with a rm that does not cover the whole set of markets (Valletti et al., 2002). In this paper, we fully characterize the resulting price equilibrium when universal service obligations are imposed. With a limited market coverage by the entrant or a small degree of degree of product di erentiation, the equilibrium is a mixed strategy one.

Date: 2009
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