Long Run Incremental Cost

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Long Run Incremental Cost

A foreseen, future change in the incremental cost to a company, which is the cost of a company producing one more unit of a product. Long run incremental costs are likely changes to the inputs of making a product, such as the cost of raw materials. For example, if making a product requires a significant amount of oil, and oil prices are thought to be likely to decline, the long run incremental cost is also likely to decline. While there is no guarantee that the long run incremental cost will change in the exact amount expected, attempting to calculate it helps a company make future investment decisions.
References in periodicals archive ?
and 2) How can QoS concepts be implemented in LRIC models?
The 3rd section provides an answer to the second question by describing what could be modified in an LRIC model in order to derive the cost of services provided with QoS.
That means we take this LLU charge as a proxy for the incumbent's LRIC in Euroland.
In view of the impending shut-down of the copper network, the incumbent's decision to switch from a copper to a fibre network does not depend on the LRIC replacement cost of the copper network but on the cost of operating and maintaining the copper network.
This in figure 1, 'LRIC (Plum)' denotes our calculation of FT's valuation using the LRIC methodology recommended by Plum Consulting, which is discussed in more detail in the following Section.
Pure LRIC was the last charging regime discussed and evaluated.
First, the LRIC methodology as used by Ofcom is forward looking in nature, and explicit assumptions are made about factors such as future asset prices and volumes.
This may be the case where compliance requirements of an intervention are extensive (such as the need for detailed cost accounting based on the LRIC standard, monitoring of terms and conditions including technical parameters).
At that point, the opportunity cost tha incumbents would receive for foregoing a downstream customer is zero and "efficient component pricing rule" [ECPR] reduces to LRIC.
Thus it is important to understand the LRIC as a kind of pro-competitive policy whose simple and pure application may have a negative impact on the development of the telecommunications industry (FUKE, 2003b).
Note also that another group, the Independent Regulators Group, has also adopted Principles of Implementation and Best practices (PIBs) on several detailed regulatory issues like mobile call termination, cost recovery principle, local loop unbundling, LRIC cost modelling: PIBs of April 1st 2004 on the application of remedies in the mobile voice call termination market; PIBs of September 24th 2003 regarding cost recovery principles; PIBs of October 18th 2001 regarding Local Loop Unbundling (as amended in May 2002); PIBs of November 24th 2000 regarding FL-LRIC cost modelling.