h replacement cost and historical cost methodologies in implementing both rate regulation and access regulation. The unifying thread to these approaches was their commitment to basing rates on direct cost and their refusal to take opportunity cost or market- based influence into account. As discussed in Chapter 4, regulatory approaches that base rates solely on direct costs fail to reflect that value is determined by demand- side considerations as well as supply-side considerations and that basic economic theory requires the inclusion of some factor to reflect the earning potential of the regulated input. The only conceivable justification for failing to base rates on market prices is that the absence of comparable transactions rendered such an attempt inherently circular. Indeed, as the foregoing discussion reveals, Justice Brandeis and the reg- ulatory authorities and courts that followed his lead relied on this reasoning to justify their advocacy of cost-based approaches. What modern regulatory authori- ties have failed to recognize is that the emergence of platform competition and the shift from rate regulation to access regulation have now made it possible to base rates on market benchmarks. The possibility of input substitution allows exter- nal markets for inputs to exist even in the absence of external markets for final goods. In addition, the raison d'étre of access regulation is to foster competition in final goods markets. Any success in doing SO will only serve to further undercut the justification for refusing to base rates on market transactions. The shift from output to input regulation has also undermined the previously proffered reasons for rejecting the income capitalization approach. When regulation focuses on the rate charged for an input rather than for a final good, the regulated price becomes only one of many factors that determines the good's overall earning potential. As 17 169 U.S. 466, 544-47 (1898). Although using replacement cost as the rate base is associated with Smyth V. Ames, the 