Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5067493 | European Economic Review | 2006 | 23 Pages |
Abstract
Regulators across many different jurisdictions and industries have recently adopted the practice of setting access prices based on the current costs of providing the relevant facilities. Though widely regarded as being efficient, the efficiency implications of using current costs instead of historical costs have not been formally analyzed. Our analysis shows that given stochastic costs, forward-looking access prices retard investment and are generally dominated by access prices determined by historical cost whenever investment is desired.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Graeme Guthrie, John Small, Julian Wright,