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Title: Pricing access: Forward-looking versus backward-looking cost rules
Authors: Guthrie, G.
Small, J.
Wright, J. 
Keywords: Access pricing
Issue Date: Oct-2006
Citation: Guthrie, G., Small, J., Wright, J. (2006-10). Pricing access: Forward-looking versus backward-looking cost rules. European Economic Review 50 (7) : 1767-1789. ScholarBank@NUS Repository.
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. © 2005 Elsevier B.V. All rights reserved.
Source Title: European Economic Review
ISSN: 00142921
DOI: 10.1016/j.euroecorev.2005.08.004
Appears in Collections:Staff Publications

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