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A network bypass model of cook strait ferries

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  • Richard Martin

Abstract

This paper investigates whether or not deregulation and privatization lead to an increase in welfare for the narrowly defined market of ferry passenger service across Cook Strait, New Zealand. The model investigates the relationship between price competition, product differentiation and the duplication of fixed costs. We argue that high post entry prices are best interpreted as a symptom of product differentiation rather than collusion. A justification for deregulation and privatization that does not depend on regulatory failure is provided.

Suggested Citation

  • Richard Martin, 2006. "A network bypass model of cook strait ferries," New Zealand Economic Papers, Taylor & Francis Journals, vol. 40(1), pages 7-22.
    • Handle: RePEc:taf:nzecpp:v:40:y:2006:i:1:p:7-22
    DOI: 10.1080/00779954.2006.9558550
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    References listed on IDEAS

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    1. Green, Edward J & Porter, Robert H, 1984. "Noncooperative Collusion under Imperfect Price Information," Econometrica, Econometric Society, vol. 52(1), pages 87-100, January.
    2. Asher Wolinsky, 1997. "Regulation of Duopoly: Managed Competition vs Regulated Monopolies," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(4), pages 821-847, December.
    3. Nicolas Curien & Bruno Jullien & Patrick Rey, 1998. "Pricing Regulation Under Bypass Competition," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 259-279, Summer.
    4. Edward H. Chamberlin, 1953. "The Product as an Economic Variable," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 67(1), pages 1-29.
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