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)
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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.
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Publisher Info
Paper provided by Dipartimento di Scienze Economiche - Università di Bari in its series series with number
0010.
Length: 41 Date of creation: Feb 2006 Date of revision:
Feb 2006 Handle: RePEc:bai:series:wp0010
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. Contact details of provider: Postal: Via Camillo Rosalba, 53 - 70124 - Bari ITALY Phone: +390805049042 Fax: +390805049149 Web page: http://www.dse.uniba.it More information through EDIRC
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