Journal Article•
The ABC's of Universal Service: Arbitrage, Big Bucks, and Competition
About: This article is published in Hastings Law Journal.The article was published on 1999-01-01 and is currently open access. It has received 5 citations till now. The article focuses on the topics: Arbitrage & Competition (economics).
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TL;DR: Overall, it is found that universal service programs that base subsidy dollars on the cost of providing service have little effect on telephone penetration rates and result in large taxes, which distort market outcomes and drive those paying into the system from the network.
67 citations
Cites background from "The ABC's of Universal Service: Arb..."
...As expected, eligibility requirements have proven to be a contentious issue (Rosston and Wimmer, 1999)....
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...As discussed by Rosston and Wimmer (1999), regulators have adopted a slew of nonsensical jurisdictional definitions to determine which services will 12 be taxed to fund universal service programs and regulators have a large say in which carriers are eligible for support....
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...24 For a more detailed discussion of these issues, see Rosston and Wimmer (1999)....
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...See Rosston and Wimmer (1999)....
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...As discussed by Rosston and Wimmer (1999), regulators have adopted a slew of nonsensical jurisdictional definitions to determine which services will...
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TL;DR: In this article, the authors exploit two features of the Lifeline phone subsidy program, state-level variation in regulatory environments and a one-time reform to test how oversight influences the behavior of heterogeneous firms.
Abstract: Many government benefits and services are provided through private markets. Firms compete to provide services directly to individuals, and the most productive firms survive and serve the market. However, insufficient enforcement of program rules weakens competitive pressures, allowing less productive firms to maintain market share. Exploiting two features of the Lifeline phone subsidy program, state-level variation in regulatory environments and a one-time reform, I test how oversight influences the behavior of heterogeneous firms. Lower productivity firms select into loose-oversight markets, driving the large state-level differences in wasteful program spending. Similar forces may factor into healthcare, education, and consumer finance markets.
3 citations
01 Jan 2000
TL;DR: In this paper, the authors discuss the theory of universal service, the new federal program, who gets the sub-subsidy, Demographic Information, and what it costs to provide phone service.
Abstract: This chapter contains sections titled: Introduction, Theory of “Universal Service”, What Does It Cost to Provide Phone Service?, The New Federal Program, Who Gets the Subsidy?, Demographic Information, Conclusions, Notes, References
3 citations
TL;DR: In this paper, the authors study how compliance behavior varies across competing service providers in the Lifeline phone subsidy program and assesses whether enlarging the set of providers improves program outcomes.
Abstract: This paper studies how compliance behavior varies across competing service providers in the Lifeline phone subsidy program and assesses whether enlarging the set of providers improves program outcomes. In markets where firms compete to provide government benefits or services directly to individuals, the most productive firms—in terms of service quality or operating costs—survive and serve the market. However, imperfect enforcement of program rules may weaken competitive pressures through non-compliance, allowing less productive firms to maintain market share. I exploit institutional features of the Lifeline program, state-level variation in regulatory environments and a one-time reform, to empirically document the importance of provider heterogeneity following a 2008 expansion of Lifeline. The presence of low-compliance providers in particular markets drives the largest state-level differences in wasteful or inefficient program spending. Qualitatively, these providers appear to select into state markets with looser enforcement of program rules. In counterfactual simulations, excluding low-compliance providers prevents 500,000 ineligible enrollments, while only reducing eligible enrollments by 100,000. Further restrictions come at a higher cost, reflecting the trade-off of compliance and competition.