Athens News had an article today regarding the subsidising of Greek ferry services.
But why do ferry services need to be subsidised?
Cost, or so the government will tell you. If the government was not involved, the cost of ferry services would be too expensive for people to afford is the line.
Ferry services would not be too expensive, ferry services will be a price that people can afford to pay. If people cannot afford them they will not use them so often.
If prices are too high, other companies will come it to offer cheaper, better or faster services.
Putting subsidies in, guarantees that there will be no competition as no ferry company will be able to come and make money because the competition has subsides.
If you have ever been on a subsidised ferry service you will know that they are the worst ferry services in Europe.
Ferry companies who get subsidies are lazy and carry out minimal investment. Ferry routes which are subsidised are a cash cow and get no innovation.
And it does not stop there. Not only are ferry routes subsidised. Companies are also protected.
Other ferry companies cannot come in and compete with the subsidised services. This is the most crazy part of the entire subsidy system.
The service offered by the subsidized company is so bad, non subsidised companies could come in and still make money if they were allowed to.
By eliminating competition in the market you are guaranteeing that the service will be worse and more expensive that it needs to be. In Greece only 3 companies receive subsides and this is despite Greece having over 227 inhabited islands.
Subsidies on their own are bad enough but to then protect the companies that are getting the subsides guarantees that only the companies with political connections are able to get the work.
http://www.istiee.org/te/papers/N37/01%20Constantinos_1-15_.pdf
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