Regulating a monopoly with universal service obligations: The role of flexible tariff schemes
We present a tractable setup to address universal access obligations issues. We analyze three regulatory regimes that vary on the degree of flexibility. We show how the monopolist reacts to each regulated tariff and regulatory regime. We find optimal regulated tariffs; the first-best is reached under full flexibility. Partial flexibility is good for political economy reasons; it can be efficient.
universal service obligation monopoly regulation network utilities non-linear tariffs