Although the future socio-economic benefits of a new fibre-based ('next generation access', NGA) telecommunications infrastructure seem to be uncontroversial, a universal NGA coverage appears to be a rather unrealistic objective without government intervention. We contend, however, that the...

This paper analyzes how far a regulated price should be adjusted to realized marginal cost in a stochastic environment. Lyon (1996) shows that partial cost passthrough will improve welfare relative to an exogenously fixed price cap even if incentives for effort supply are reduced. In this paper...