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

Author

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  • Rafael Aigner
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.

Suggested Citation

  • Rafael Aigner, 2016. "The Fehmarn Belt Duopoly - Can the Ferry Compete with a Tunnel?," Discussion Papers of DIW Berlin 1539, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1539
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    References listed on IDEAS

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    More about this item

    Keywords

    Fehmarn Belt Fixed Link; transportation economics; competition analysis; route choice; asymmetric duopoly;
    All these keywords.

    JEL classification:

    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General

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