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Author: | Guthrie, G. Small, J. Wright, J. |
Title: | Pricing access: forward-looking versus backward-looking cost rules |
Journal: | European Economic Review
2006 : OCT, VOL. 50:7, p. 1767-1789 |
Index terms: | telecommunication access pricing regulations investment costs models |
Language: | eng |
Abstract: | Across many jurisdictions and industries, regulators have adopted the practice of setting access prices (hereafter as: acc-prcs.) based on the current costs (here as: c-cts.) of providing the relevant facilities. The efficiency implications of using c-cts. instead of historical costs (as: h-cts.) have not been formally analyzed. This study's analysis shows that given stochastic costs, forward-looking acc-prcs. retard investment and are generally dominated by acc-prcs. determined by h-cts. whenever investment is desired. |
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