Universal Service Obligations in Developing Countries

31 Pages Posted: 20 Apr 2016

See all articles by Antonio Estache

Antonio Estache

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Jean-Jacques Laffont

University of Southern California - Department of Economics (Deceased)

Xinzhu Zhang

Chinese Academy of Social Sciences (CASS) - Research Center for Regulation and Competition

Date Written: September 28, 2004

Abstract

Estache, Laffont, and Zhang develop a model to analyze the effects of asymmetric information on optimal universal service policy in the public utilities of developing countries. Optimal universal service policy is implemented using two regulatory instruments - pricing and network investment. Under discriminatory pricing, asymmetric information leads to a higher price and smaller network in the rural area than under full information. Under uniform pricing, the price is lower but the network is even smaller. In addition, under both pricing regimes, not only the firm but also taxpayers have incentives to collude with the regulator.

This paper - a product of the Office of the Vice President, Infrastructure Network - is part of a larger effort in the network to promote analytical work on emerging policy issues in infrastructure service delivery.

Suggested Citation

Estache, Antonio and Laffont, Jean-Jacques and Zhang, Xinzhu, Universal Service Obligations in Developing Countries (September 28, 2004). World Bank Policy Research Working Paper No. 3421. Available at SSRN: https://ssrn.com/abstract=625299

Antonio Estache (Contact Author)

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium
32 (0)2 6503838 (Phone)

Jean-Jacques Laffont

University of Southern California - Department of Economics (Deceased)

No Address Available

Xinzhu Zhang

Chinese Academy of Social Sciences (CASS) - Research Center for Regulation and Competition ( email )

Beijing, 100732
China

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