| By: |
Angela S. Bergantino (University of Bari, Department of Economics, Via C. Rosalba, 53, 70124 Bari (Italy));
Etienne Billette de Villemeur (University of Toulouse, IDEI and GREMAQ, Manufacture des Tabacs, Aile Jean-Jacques Laffont);
Annalisa Vinella (University of Toulouse, GREMAQ, Manufacture des Tabacs, Aile Jean-Jacques Laffont) |
| Abstract: |
In this paper, we study how maritime ferry industries should be regulated.
This is a fundamental issue in so far as maritime transport between islands
and mainland is a service of general interest. We argue that the policy design
crucially depends on the goals the collectivity pursues (pure e¢ ciency,
fairness) as well as on the relevant industry structure (monopoly, oligopoly).
We show that the regulator needs to prevent ine¢ cient crowding out, whenever
room exists for access of new providers to former monopolies. By properly
allocating tra¢ c across shippers, the regulated firm's budget constraint can
then be relaxed. We subsequently shed light on the implications of adopting
the territorial continuity principle to boost social fairness. We establish
that the incumbent's public service obligations dump the entrant's incentives
to provide connections in the low season; conversely, soft competition
encourages the entrant to operate in the high season, when it pockets a net
rent. As to customers, our model predicts that the islanders, whose
consumption is partly subsidized by the non-residents, patronize the incumbent
and that liberalization directly benefits the non-residents who switch to the
entrant. |
| Keywords: |
Maritime transport; Price and frequency; Partial regulation; Territorial |
| JEL: |
L51 L92 R48 |
| URL: |
http://d.repec.org/n?u=RePEc:bai:series:wp0010&r=tur |