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Gradual Network Expansion and Universal Service Obligations
Axel Gautier
Keizo Mizuno
出版
SSRN
, 2011
URL
http://books.google.com.hk/books?id=TkDhzwEACAAJ&hl=&source=gbs_api
註釋
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.