 Economic Depreciation and the Regulated Firm under Competition and Technological ChangeMichael A Crew and Paul R Kleindorfer Journal of Regulatory Economics, 1992, vol. 4, issue 1, 61 pages Abstract: Capital recovery is increasingly important to utilities especially telephone companies when technological change and competitive entry are occurring. In the absence of efficient capital recovery policies companies are going to see their equity eroded. In addition to losses by the companies there are likely to losses to ratepayers in the form of reductions in service quality and higher rates in the future. To address the above problem this paper first reviews economic depreciation and capital recovery in the simple case of a regulated single product monopoly facing competitive entry. It employs the concept of economic depreciation to show how capital recovery policies will be front-loaded. It also develops the concept of the window of opportunity for capital recovery. There is a limited time for regulators to take remedial action, and if timely action is not taken there is no alternative but for the company to fail to recover some of its capital. These results are shown under both traditional rate of return and price caps. Copyright 1992 by Kluwer Academic Publishers Date: 1992 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kap:regeco:v:4:y:1992:i:1:p:51-61 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Regulatory Economics is currently edited by Menaham Spiegel More articles in Journal of Regulatory Economics from Springer |
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