Access Holidays for Network Infrastructure Investment

The need for an access holiday to spur investment arises from the ex ante inability of regulators to commit to access prices that adequately reward investors for all relevant risks. A well designed access holiday can partially overcome the problem of regulatory commitment, and represents a second-best solution to this problem, by limiting regulatory intervention for a number of years. In this paper, we consider the underlying problem of investment incentives and access regulation. We also highlight precisely what an access holiday can and cannot do. In particular we highlight important practical issues that need to be considered regarding access holidays.