Competitive analysis: Is the Fehmarnbelt Fixed Link pushing ferries out of the market?
DIW Berlin – Discussion Papers 1539
The Fehmarnbelt is a strait between Denmark and Germany, which is currently crossed by a ferry. The discussion paper analyses the theory of competition between the ferry and the planned fixed Fehmarnbelt crossing.
The model is an asymmetric duopoly and addresses two questions:
- Will the planned tunnel drive the ferry operator out of the market
- Will the tunnel’s toll revenues be sufficient to cover its construction and operating costs? Numerical results complement the theoretical analysis.