Endogenous Financing of the Universal Service

Abstract

We address the question of endegenous financing of the Universal Service Obligations and we compare it with the exogeneous financing. A fund is created and fed through a tax firms pay. We show that the way these funds are implemented by the current regulatory regimes at work goes againts social welfare. We propose a new way of implementing the fund that improves social welfare. Moreover, we challenge the proportionality payment principle as it leads to lower welfare