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:

  1. Will the planned tunnel drive the ferry operator out of the market
  2. Will the tunnel’s toll revenues be sufficient to cover its construction and operating costs? Numerical results complement the theoretical analysis.
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