IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v29y2006i1p103-122.html
   My bibliography  Save this article

Access Regime Design and Required Rates of Return: Pitfalls in Adjusting for Inflation and Tax Effects

Author

Listed:
  • Kevin Davis

Abstract

Some access pricing regimes derive allowable cash flows to provide investors with an expectation of receiving a required real pre-(company) tax rate of return, with compensation for inflation built in via the allowable return of capital (depreciation). The required real pre-tax return is derived from nominal (or real) post-tax required returns. Techniques commonly used to transform post-tax into real pre-tax returns are biased, because they fail to capture accurately the characteristics of tax depreciation allowances. There is no general solution to this “transformation problem”, but alternative approaches can achieve the benefits prompting the use of a “real pre-tax” approach without suffering from this problem Copyright Springer Science+Business Media, Inc. 2006

Suggested Citation

  • Kevin Davis, 2006. "Access Regime Design and Required Rates of Return: Pitfalls in Adjusting for Inflation and Tax Effects," Journal of Regulatory Economics, Springer, vol. 29(1), pages 103-122, January.
    • Handle: RePEc:kap:regeco:v:29:y:2006:i:1:p:103-122
    DOI: 10.1007/s11149-005-5128-7
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11149-005-5128-7
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11149-005-5128-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jennergren, L. Peter, 2018. "A note on the linear and annuity class of depreciation methods," International Journal of Production Economics, Elsevier, vol. 204(C), pages 123-134.

    More about this item

    Keywords

    access pricing; rate of return; depreciation; tax; inflation; G38; L43; L51; L90;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General

    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:kap:regeco:v:29:y:2006:i:1:p:103-122. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.