An investigation into the application of third party access pricing theory

Woodward, Lara. (1999). An investigation into the application of third party access pricing theory Honours Thesis, School of Economics, The University of Queensland.

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Author Woodward, Lara.
Thesis Title An investigation into the application of third party access pricing theory
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 1999
Thesis type Honours Thesis
Total pages 92
Language eng
Subjects 14 Economics
Formatted abstract
This thesis examines the issue of third party access to monopoly infrastructure when use of the infrastructure is essential for competition in a particular market. The reform of public monopolies is a major initiative of the National Competition Policy reform agenda set by the Council of Australian Governments in 1995. Access regimes have been drafted for most major utility industries in Australia, such as telecommunications and electricity networks, and natural gas pipelines. The success of access regimes in constraining monopoly power and improving the efficiency of the market depends on both the price of access charged to third parties by the facility owner, and the institutional and legal framework for forming access arrangements. Information asymmetries and other real world complications substantially narrow the scope of pricing methods available to regulators from the range presented in theory. Also, practical solutions tend to resemble a hybrid of theory and 'rules of thumb' gathered from practical experience. This thesis discussed issues that arise during the application of pricing theory in access reform. The application of theory requires considerable adjustment of the formal models because of the existence of peculiar industry characteristics. This issue is discussed using two industries, telecommunications and gas, whose characteristics differ sig11ificantly. Further, this thesis explores the issues encountered when calculating access prices that are required to satisfy often conflicting criteria, such as rate of return requirements and efficiency objectives. It concludes that the quest for efficient prices, even "rigorously" determined second-best prices, can be somewhat futile, and that the pursuit of this objective should not be at the expense of providing adequate incentives for dynamic efficiency.

Document type: Thesis
Collection: UQ Theses (non-RHD) - UQ staff and students only
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Created: Thu, 18 Nov 2010, 17:10:25 EST by Muhammad Noman Ali on behalf of The University of Queensland Library