Article ID Journal Published Year Pages File Type
5067493 European Economic Review 2006 23 Pages PDF
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
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