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Setting access prices: A critique of the ACCC’s approach in telecommunications

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  • Henry Ergas

Abstract

Any access-system prices in multi-service networks must meet two constraints. Firstly, ‘the multi-service adding-up constraint’; that is, the sum of the regulated access charges across the range of services provided by the network must be no less than the amount which would the cover the costs of the network. Secondly, an inter-temporal or time-consistency constraint, under which the present value of the expected path of access charges over time must be no less than the initial cost. This paper argues that neither constraint is met by the access prices the ACCC has set in telecommunications.

Suggested Citation

  • Henry Ergas, 2008. "Setting access prices: A critique of the ACCC’s approach in telecommunications," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 15(4), pages 35-60.
    • Handle: RePEc:acb:agenda:v:15:y:2008:i:4:p:35-60
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    File URL: http://press-files.anu.edu.au/downloads/press/p88011/pdf/15-4-AN-3.pdf
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    References listed on IDEAS

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    1. Productivity Commission, 2002. "Review of the National Access Regime," Others 0210002, University Library of Munich, Germany.
    2. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    3. Guthrie, Graeme & Small, John & Wright, Julian, 2006. "Pricing access: Forward-looking versus backward-looking cost rules," European Economic Review, Elsevier, vol. 50(7), pages 1767-1789, October.
    4. J. Gregory Sidak & William Baumol, 1995. "Transmission Pricing and Stranded Costs in the Electric Power Industry," Books, American Enterprise Institute, number 52281, September.
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    Cited by:

    1. Henry Ergas, 2009. "Error and Design: Economics in (and some Economics of) the Australian Competition Tribunal," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 16(3), pages 71-94.

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