The Fehmarn Belt duopoly – Can the ferry compete with a tunnel?

Rafael Aigner and Katharina Weber

Transportation Research Part A: Policy and Practice, 2017, vol. 100, issue C, 1-15

Abstract: The Fehmarn Belt is a strait between Denmark and Germany, currently served by a ferry operator. We analyse competition between the ferry service and a planned tunnel, the Fehmarn Belt Fixed Link. We develop a differentiated duopoly model to address two questions: 1. Will the tunnel induce the ferry to exit the market once it operates? 2. Will the tunnel’s toll revenue suffice to cover its cost? Using real-world data and traffic forecasts, we show that it should not be taken for granted that the ferry will exit the market, and that if the ferry competes, the tunnel project will make a loss.

Keywords: Fehmarn Belt Fixed Link; Transportation economics; Competition analysis; Route choice; Duopoly; Product differentiation (search for similar items in EconPapers)
JEL-codes: D43 L91 R42 (search for similar items in EconPapers)
Date: 2017
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Working Paper: The Fehmarn Belt Duopoly - Can the Ferry Compete with a Tunnel? (2016)
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DOI: 10.1016/j.tra.2017.03.006

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