19 August 2009

Network economics and universal service

I found this item over at CircleID interesting. In it, the author discusses the penalty of non-inclusion (see the graph below) and uses it to make an argument in favor of universal service.

This brought to mind some of Eli Noam's seminal work (this article, for example), in which Noam outlines the incentives people have to leave a universal network (see the graph below, from the paper). We are thus left with conflicting incentives, which serve to underscore the difficulties in achieving universal service.

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