A Model of Partial Regulation in the Maritime Ferry Industry

Angela S. Bergantino (), Etienne Billette de Villemeur () and Annalisa Vinella ()
Additional contact information
Angela S. Bergantino: University of Bari, Department of Economics, Via C. Rosalba, 53, 70124 Bari (Italy)

No 10, series from Dipartimento di Scienze Economiche - Università di Bari

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 (search for similar items in EconPapers)
JEL-codes: L51 L92 R48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cse, nep-mic, nep-reg and nep-tur
Date: Written
Note: We gratefully acknowledge comments from the participants at the XVII Scientific Meeting of the Soci- età Italiana di Economia Pubblica (University of Pavia) and the 4th Conference on Applied Infrastructure Research (WIP Center, Berlin University of Technology). We would like to thank David Gillen for partic- ularly useful suggestions. The usual disclaimers apply.
View list of references View citations in EconPapers

Downloads: (external link)
http://www.dse.uniba.it/Quaderni/SERIES/WP_0010.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bai:series:wp0010

Access Statistics for this paper

More papers in series from Dipartimento di Scienze Economiche - Università di Bari
Address: Via Camillo Rosalba, 53 - 70124 - Bari ITALY
Contact information at EDIRC.
Series data maintained by Ruggiero Marco Paolillo ().