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The Fehmarn Belt Duopoly - Can the Ferry Compete with a Tunnel?

Rafael Aigner

No 1539, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The Fehmarn Belt is a strait between Denmark and Germany, currently served by a ferry. This note analyses the theory of competition between the ferry and a planned tunnel, the Fehmarn Belt Fixed Link. The model is an asymmetric duopoly and addresses 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? To complement the theoretical analysis, the note provides results of a numerical application.

Keywords: Fehmarn Belt Fixed Link; transportation economics; competition analysis; route choice; asymmetric duopoly (search for similar items in EconPapers)
JEL-codes: D43 L91 R42 (search for similar items in EconPapers)
Pages: 13 p.
Date: 2016
New Economics Papers: this item is included in nep-ore
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Journal Article: The Fehmarn Belt duopoly – Can the ferry compete with a tunnel? (2017) Downloads
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