Reference : Gradual Network Expansion and Universal Service Obligations
Scientific journals : Article
Business & economic sciences : Microeconomics
http://hdl.handle.net/2268/95559
Gradual Network Expansion and Universal Service Obligations
English
Gautier, Axel mailto [Université de Liège - ULg > HEC-Ecole de gestion de l'ULg : UER > Economie industrielle >]
Mizuno, Keizo [> >]
Jun-2011
Annals of Public and Cooperative Economics = Annales de l'Economie Publique, Sociale et Coopérative
Wiley
82
2
97-113
Yes (verified by ORBi)
International
1370-4788
1467-8292
Oxford
United Kingdom
[en] Universal service ; uniform pricing ; entry ; network expansion ; postal sector
[en] Universal service obligations are usually not competitively neutral as they modify the way firms compete in the market. In this paper, we consider a continuum of local markets in a dynamic setting with a stochastically growing demand. The incumbent must serve all markets (ubiquity) possibly at a uniform price and an entrant decides on its market coverage before firms compete in prices. Connecting a market involves a sunk cost. We show that the imposition of a uniform price constraint modifies the timing of entry: for low connection cost markets, entry occurs earlier while for high connection cost markets, entry occurs later.
Researchers ; Professionals
http://hdl.handle.net/2268/95559

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