Universal service obligations in LDCs: The effect of uniform pricing on infrastructure access |
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| Affiliation: | 1. Departmento de Medicina Molecular y Bioprocesos, Instituto de Biotecnologia, Universidad Nacional Autonoma de Mexico, Avenida Universidad Nacional Autonoma de Mexico, Avenida Universidad, 2001, Colonia Chamilpa, Apartado Postal 510-3, Cuernavaca 62210, Mexico;2. Laboratorio Universitario de Proteomica, Instituto de Biotecnologia, Universidad Nacional Autonoma de Mexico, Avenida Universidad, 2001, Colonia Chamilpa, Apartado Postal 510-3, Cuernavaca 62210, Mexico;1. Autonomous University of Mexico City, Genomics Sciences Program, Mexico City, Mexico;2. Biotechnology Program, National School of Medicine and Homeopathy, National Polytechnic Institute, Mexico City, Mexico;3. Institutional Program of Molecular Biomedicine, National School of Medicine and Homeopathy, National Polytechnic Institute, Mexico City, Mexico;4. Unit of Cell Biology for Parasitism, Pasteur Institute, Paris, France;5. INSERM U786, Paris, France;6. Translational Medicine Laboratory, National Institute of Cancerology, Mexico City, Mexico;7. Laboratory of Translational Cancer Research and Cellular Therapy, Oncology Hospital, Medical Center Siglo XXI, Mexico City, Mexico |
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| Abstract: | This paper develops a model to analyze the impacts 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 also 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. |
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