LRIC

Long Run Incremental Cost ( LRIC ) stands for long -term incremental cost of a business entity ( increment). The modification Long Run Average Incremental Cost ( LRAIC ) stands for the average long-term incremental costs.

LRIC play since 1960 a special role in the regulation of the economy, because there was not practicable, the instrument of marginal costs. The economic unit ( increment) to which the LRIC applies, a whole business or just a part may concern.

By default, the cost of an increment to be collected, which arise a provider that it provides a specific service within a given portfolio at present and in the future, and markets, which is expressed by long -run, that it is cost, in the long term, all are variable - variable in the sense that they arise according to circumstances, or can not be created or decisions of the company with respect to development of businesses, investments, etc. depend on the given times - and by incremental that it this is the cost of this particular performance that arise in addition to the costs that is sufficient for all the rest of the portfolio incurred and provided by the supplier network services generally.

Determination

The LRIC is determined in a top-down models by dividing the total cost of an existing increment will be adjusted for the inefficiencies. In bottom-up LRIC models, is determined from the basic data in telecommunication about " demand, as it manifests itself in the market, a network that can meet this demand and has been mapped in accordance with the best technology on the computer, and the applicable to the input prices. "