LRAICLong Run Average Incremental Cost
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(35) Failure to cover AAC indicates that an equally efficient competitor cannot serve targeted customers without incurring a loss, while failure to cover LRAIC (which is generally higher than AAC because it includes more fixed costs) indicates an equally efficient competitor could be foreclosed from the market.
at 21 (paragraph 66) ("Normally only pricing below LRAIC ...
(185) Therefore, the European Commission considered that the relevant cost measure is the LRAIC, in order to assess the ability to operate profitably in the long term.
(283) Although the cost model used by the regulatory authority to assess the undertaking's wholesale prices was based on the LRAIC, it was used to define the maximum prices for wholesale access ex ante, while the assessment of price compatibility with Article 102 considered ex post historical data.
Recently, the Commission refined its intentions for future intervention when it clarified that a price squeeze is considered a refusal to deal and adopted LRAIC as a benchmark.
incorrectly relied on LRAIC as the price that a competitive market would
to LRAIC would be insufficient to recover the total costs an incumbent
In its endorsement of LRAIC as the best measure of an
Currently in Austria, termination rates are calculated on the basis of Long Run Average Incremental Costs (LRAIC) of an efficient operator.
* LRAIC where the efficient costs are determined for each operator based on his individual costs.
Firstly, the alternatives of enhancement of the current LRAIC methodology are discussed (see Table 1).
The Swedish NRA considered the implementation of the calculated LRAIC for all operators at once to be too harsh.