Incentive Mechanism Design of the Cost Compensation in Electricity Universal Service

Universal service is one of public functions of government and fundamental work in the system engineering for a harmonious society. Owing to the beneficiaries live in remote place, so the marginal cost of universal service is high, meal while The objection of power enterprises is inconsistent with a government's public functions. In order to encourage power enterprise to undertake universal service, government should provide the cost compensation that is based on the associated costs of universal service. For disclosing the real cost, this paper studied the conditions of individual rationality and incentive compatibility of the power enterprise undertaking universal service. Finally, it contributed a theoretical basis for the cost compensation.