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Article

Universal Service Regulation and Network Effects in Services of General Economic Interest in the European Union

by
Carlos Pateiro-Rodríguez
1,
Federico Martín-Bermúdez
1,*,
Carlos Pateiro-López
2 and
Manuel Escourido-Calvo
3
1
Department of Applied Economics, University of A Coruña, 15008 A Coruña, Spain
2
Department of Taxation, Tax and Financial Advisor, 15011 A Coruña, Spain
3
Department of Business, University of A Coruña, 15008 A Coruña, Spain
*
Author to whom correspondence should be addressed.
Economies 2024, 12(10), 280; https://doi.org/10.3390/economies12100280
Submission received: 19 September 2024 / Revised: 11 October 2024 / Accepted: 14 October 2024 / Published: 17 October 2024
(This article belongs to the Section Economic Development)
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Abstract

The process of the liberalisation of services of general economic interest (SGEI) in the EU adopted the universal service (US) regulatory model. The objectives of the process were to strengthen free competition and improve social welfare. SGEIs have the characteristic of networked services and, as such, generate network externalities, as considered by the theory of market failures. This paper analyses the potential of the US in its role as a remedy for network externalities. In the SGEI context, the large number of participants reinforces network externalities, while limiting coordination mechanisms between users. Based on the relevant literature, a theoretical debate arises around the contribution of universal service obligations (USOs) to social welfare. A microeconomic analysis shows that USOs modify consumers’ utility functions by shifting from inefficient market equilibria to efficient equilibria, thereby improving social welfare.
Keywords: services of general economic interest; universal service; network externalities; social welfare services of general economic interest; universal service; network externalities; social welfare

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MDPI and ACS Style

Pateiro-Rodríguez, C.; Martín-Bermúdez, F.; Pateiro-López, C.; Escourido-Calvo, M. Universal Service Regulation and Network Effects in Services of General Economic Interest in the European Union. Economies 2024, 12, 280. https://doi.org/10.3390/economies12100280

AMA Style

Pateiro-Rodríguez C, Martín-Bermúdez F, Pateiro-López C, Escourido-Calvo M. Universal Service Regulation and Network Effects in Services of General Economic Interest in the European Union. Economies. 2024; 12(10):280. https://doi.org/10.3390/economies12100280

Chicago/Turabian Style

Pateiro-Rodríguez, Carlos, Federico Martín-Bermúdez, Carlos Pateiro-López, and Manuel Escourido-Calvo. 2024. "Universal Service Regulation and Network Effects in Services of General Economic Interest in the European Union" Economies 12, no. 10: 280. https://doi.org/10.3390/economies12100280

APA Style

Pateiro-Rodríguez, C., Martín-Bermúdez, F., Pateiro-López, C., & Escourido-Calvo, M. (2024). Universal Service Regulation and Network Effects in Services of General Economic Interest in the European Union. Economies, 12(10), 280. https://doi.org/10.3390/economies12100280

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