Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/52420 
Year of Publication: 
2011
Series/Report no.: 
Kiel Working Paper No. 1741
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
The Kiel Canal in Germany connects ports on the Baltic Sea with the rest of the world and is the most-used artificial waterway in the world. Despite this fact, it generates a balance sheet loss. Revenues, which are mainly generated by the transit charge, do not cover its operating expenses. This situation raises the question: What reforms could be made to make the canal generate a balance sheet profit? In this paper, we focus solely on the canal's revenue. Because the canal is a monopoly that allows, in principle, for perfect price discrimination, we contrast the current charging system with an optimal charging system based on the willingness-to-pay (WTP) approach. We devise a general approach to calculate optimal transit charges and apply it in a case study that includes four different ship types. We conclude that much higher revenues could be generated, on the order of between $5 and $45 million more per year and ship type if the transit charge were based not only on ship size but also on a ship's departure and destination ports.
Subjects: 
optimal transit charge
Kiel Canal
shipping cost
Germany
price discrimination
JEL: 
R48
L92
Document Type: 
Working Paper

Files in This Item:
File
Size
583.07 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.