A Multidisciplinary Approach
Chapter 4: Recent Trends in Infrastructure-based Sectors
● 43 ● ● The importance of the utility service requires universal coverage. In a geographically defined service area, the service should be universally available to a uniform technical standard with sufficient quality for the consumers. Different prices can sometimes be charged to different consumer groups, leading to divergent profitability levels for these various groups. Commercially thinking providers might thus be tempted to reconsider the supply of unprofitable services. The great importance of the utility service for consumers and the consequent desirability for everybody to actually buy the service make it necessary for the service to be affordable for all consumers. For a number of utility services, passing on the full costs would lead to such high tariffs that the sales of the facility would remain below critical levels. This is a reason to support the facility financially from public funds, which makes it possible to charge consumers a lower tariff and brings the facility within the budget of more people (this is called marit good nature of the utility service). For example, many public-transport services are subsidized. Passing on the full costs of building and operating the rail infrastructure would make fares so expensive that few people would use public transport. This is societally undesirable. The merit-good nature of many utility services also causes many of them to have a universal tariff, irrespective of the actual costs incurred to deliver the service to an address. The mail is an example of this. Irrespective of the distance between the addressee and the sender...
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