nep-reg New Economics Papers
on Regulation
Issue of 2013‒05‒22
four papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Addressing the Electricity Access Gap By World Bank
  2. Price Regulation and the Financing of Universal Services in Network Industries By Christian Jaag
  3. Intellectual Property Rights and the Future of Universal Service Obligations in Communications By Christian Jaag
  4. Design and operating of gas transmission networks. By Babonneau, Frédéric

  1. By: World Bank
    Date: 2012–01
  2. By: Christian Jaag
    Abstract: The financing of universal service in network industries has traditionally relied on granting the universal service provider (USP) a reserved area. Liberalization policies promoting competitive entry put the traditional universal service at risk. Consequently, there is an increased interest in knowing the cost of the universal service obligation (USO) and an intensive policy debate about its financing. This paper explores the complementary roles of price regulation and universal service regulation in network industries. It analyzes compensation for the universal service provider by public finances and a USO fund. As long as the USP enjoys market power, also price regulation may serve as a means to finance universal services. This implies allowing for price increases to compensate for the net cost of the USO. It releases competing operators or the general budget from contributing to the financing of the USO but results in distorted pricing and reduced overall welfare due to inefficient entry. Generally, the analysis shows that current practices of costing and financing universal services may result in unintended market distortions. The paper quantifies these effects and demonstrates how such distortions can be avoided.
    Keywords: Universal service obligation, Postal sector, Net cost, Price regulation
    JEL: L51
    Date: 2013–04
  3. By: Christian Jaag
    Abstract: Network industries are traditionally strongly influenced by sector-specific regulation; especially universal service obligations (USO) play an important role. In these sectors, USO impact market forces by shaping competition asymmetrically. They also interfere with other regulations such as intellectual property laws which are of increasing importance in these industries. This interaction has recently become of interest in the postal sector due to its recent convergence with telecommunications and the emergence of innovative services at the interface of the two sectors. In free markets, the design of intellectual property right trades off investment incentives against market distortions due to (temporary) exclusive rights. USO distort competition and thereby affect the optimal solution of this trade-off. The paper discusses various aspects of the influence of patents on universal service provision. It also illustrates these effects by means of a simple model of an innovation race under asymmetric regulation and with forced licensing to derive regulatory and policy implications to safeguard a cost-effective and consumer-oriented provision of universal services.
    Keywords: Universal service obligation, Communications, Intellectual Property
    JEL: L51 O34
    Date: 2013–05
  4. By: Babonneau, Frédéric
    Abstract: Problems dealing with the design and operations of gas transmission networks are challenging. The standard approaches lead to a difficult nonlinear nonconvex optimization problem. To get around this difficulty, we use a minimum energy principle to define stationary flows in the network. This solution minimizes the total energy dissipated in the system. We extend the minimization process to the choice of suitable diameters on the reinforcing arcs and add a constraint that limits the monetary cost of investment and of purchase and delivery of gas. Under a suitable and acceptable approximation of the structure of the investment cost function, the new problem turns out to be convex and tractable even for very large networks.
    Date: 2012

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