IDEAS home Printed from https://ideas.repec.org/p/vuw/vuwecf/33482.html

Pricing Access: Forward versus Backward Looking Cost Rules

Author

Listed:
  • Guthrie, Graeme
  • Small, John
  • Wright, Julian

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, this practice has not been formally analyzed. Our analysis shows that given stochastic costs, forward looking access prices retard investment and are dominated by access prices determined by historic cost whenever investment is desired, unless the cost of investment is trending upwards with low volatility.

Suggested Citation

  • Guthrie, Graeme & Small, John & Wright, Julian, 2002. "Pricing Access: Forward versus Backward Looking Cost Rules," Working Paper Series 33482, Victoria University of Wellington, School of Economics and Finance.
    • Handle: RePEc:vuw:vuwecf:33482
    as

    Download full text from publisher

    File URL: https://ir.wgtn.ac.nz/handle/123456789/33482
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Laffont, Jean-Jacques & Tirole, Jean, 1994. "Access pricing and competition," European Economic Review, Elsevier, vol. 38(9), pages 1673-1710, December.
    2. J. Gregory Sidak & William Baumol, 1995. "Transmission Pricing and Stranded Costs in the Electric Power Industry," Books, American Enterprise Institute, number 52281, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joan Calzada & Francesc Trillas, 2005. "The interconnection prices in telecomunications: from theory to practice," Hacienda Pública Española / Review of Public Economics, IEF, vol. 173(2), pages 85-125, June.
    2. 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.
    3. Riechmann, Christoph, 2000. "Strategic pricing of grid access under partial price-caps -- electricity distribution in England and Wales," Energy Economics, Elsevier, vol. 22(2), pages 187-207, April.
    4. Demetrius Yannelis, 2002. "On access pricing with network externalities," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(2), pages 186-190, June.
    5. Ku, Hyeon-Mo & Kim, Jae-Cheol, 1998. "Non-discriminatory access pricing for multiple entrants," International Review of Economics & Finance, Elsevier, vol. 7(2), pages 173-183.
    6. Lewis, Tracy R. & Sappington, David E. M., 1999. "Access pricing with unregulated downstream competition," Information Economics and Policy, Elsevier, vol. 11(1), pages 73-100, March.
    7. Torsten Steinrücken & Sebastian Jaenichen, 2009. "Preisregulierung zum Schutz der Verbraucher: Wirkungen auf Werbung und Wohlfahrt," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(3), pages 188-201.
    8. Kopsakangas-Savolainen, Maria, 2004. "The welfare effects of different pricing schemes for electricity distribution in Finland," Energy Policy, Elsevier, vol. 32(12), pages 1429-1435, August.
    9. Rosa Sanchis-Guarner & Nikodem Szumilo & Antoine Vernet, 2024. "Startup stations: The impact of rail access on entrepreneurship (self-employment) in England and Wales," Working Papers 2024/11, Institut d'Economia de Barcelona (IEB).
    10. Christos Agiakoglou & Demetrius Yannelis, 1996. "Interconnection Charges, Substitutability and Network Externalities: An Empirical Approach," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 65(4), pages 441-445.
    11. Bickenbach, Frank, 2000. "Regulation of Europe's network industries: the perspective of the new economic theory of federalism," Kiel Working Papers 977, Kiel Institute for the World Economy.
    12. Kauko, Karlo, 2007. "Interlinking securities settlement systems: A strategic commitment?," Journal of Banking & Finance, Elsevier, vol. 31(10), pages 2962-2977, October.
    13. Inderst, Roman & Peitz, Martin, 2011. "Netzzugang, Wettbewerb und Investitionen," ZEW Discussion Papers 11-025, ZEW - Leibniz Centre for European Economic Research.
    14. Vogelsang, Ingo, 2000. "Regulation of Access to the Telecommunications Network of New Zealand: A Review of the Literature," Working Paper Series 3931, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    15. Jeong-Yoo Kim, 2009. "Competition in the LM market," Netnomics, Springer, vol. 10(2), pages 209-218, October.
    16. Bloch Francis & Gautier Axel, 2008. "Access Pricing and Entry in the Postal Sector," Review of Network Economics, De Gruyter, vol. 7(2), pages 1-24, June.
    17. Xie, Li & Kong, Chun, 2023. "The social welfare effect of electricity user connection price policy reform," Applied Energy, Elsevier, vol. 346(C).
    18. Lars Kumkar, 2003. "Regulatory Choices and Commitment: Challenges for Electricity Market Regulation in Kosovo," Post-Communist Economies, Taylor & Francis Journals, vol. 15(1), pages 91-115.
    19. Weisman, Dennis L., 2001. "Access pricing and exclusionary behavior," Economics Letters, Elsevier, vol. 72(1), pages 121-126, July.
    20. de Bijl, P.W.J. & Peitz, M., 2004. "Unbundling the Local Loop : One-Way Access and Imperfect Competition," Discussion Paper 2004-025, Tilburg University, Tilburg Law and Economic Center.

    More about this item

    Keywords

    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vuw:vuwecf:33482. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Library Technology Services (email available below). General contact details of provider: https://edirc.repec.org/data/egvuwnz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.