Contest Success Functions and the Conundrum of Access Pricing

Institute for Research Into International Competitiveness Discussion Paper No. 7/02

28 Pages Posted: 23 Jul 2007 Last revised: 16 Sep 2008

Date Written: September 1, 2002

Abstract

For economists and regulators attempting to correctly price third party access to essential infrastructure, informational asymmetries between the regulated and the regulator render accurate quantification of the long run marginal cost of the infrastructure impossible for the regulator and hence make efficient pricing difficult. However, through the application of a relatively simple regulatory game, which closely matches extant regulatory practice, it is possible to provide incentives to the regulated infrastructure owner to reveal sufficient information such that the long run marginal cost can be calculated. This paper outlines a methodology by which this can occur.

Keywords: Contest Success Function, Regulation

JEL Classification: K21

Suggested Citation

Wills-Johnson, Nick, Contest Success Functions and the Conundrum of Access Pricing (September 1, 2002). Available at SSRN: https://ssrn.com/abstract=1002255 or http://dx.doi.org/10.2139/ssrn.1002255

Nick Wills-Johnson (Contact Author)

DBP ( email )

PO Box Z5267
St Georges Terrace
Perth, 6831
Australia

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